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While starting to build its first large operation in Germany, Vulcan Energy is already preparing for a second phase 60 km to the north. The Project Ludwig aims to extract lithium from geothermal brines, produce 3.125 GWh of renewable heat per year, and leverage the advancements of Asian battery manufacturers in Europe.
The Australian Vulcan Energy Resources has started seeking new strategic investors to finance its second large-scale lithium production phase in Germany. The new venture, called Project Ludwig, is projected to require approximately €1.26 billion in investments and will have the capacity to produce 21,100 tons of battery-grade lithium carbonate annually.
According to Reuters, the company is looking for investors interested in acquiring minority stakes directly in the project. Although European groups have also shown interest, a significant portion of unsolicited interest has come from Asia, particularly as Asian battery and electric vehicle manufacturers expand their industrial presence in Europe.
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This move occurs as Vulcan’s first major project, Lionheart, begins to progress in Germany. Thus, the company aims to transform the experience from the first phase into a platform capable of supporting successive expansions of lithium and geothermal energy in the Upper Rhine Valley.
Project Ludwig Will Require €1.26 Billion
The preliminary feasibility study provided concrete numbers for the second phase.
Vulcan estimates a CAPEX of €1.26 billion to develop Ludwig, considering real values from 2026 and a 15% contingency.
The project has a planned operational life of 30 years. Furthermore, the study calculates a pre-tax net present value of €2.6 billion, using a discount rate of 8%, and a pre-tax internal rate of return of 25%.
After taxes, the estimate drops to a €1.7 billion net present value, while the projected internal rate of return stands at 20.2%.
However, these indicators are based on Vulcan’s own preliminary study. Therefore, they represent economic projections and not guaranteed returns.
New Operation Aims to Produce 21,100 Tons of Lithium Annually
The expected scale helps to contextualize the venture.
Ludwig is designed to produce 21,100 tons of battery-grade lithium carbonate per year.
This compound could supply manufacturers of cathode materials and batteries, especially in applications using lithium carbonate-based chemistries.
The project will also complement Vulcan’s first phase.
While Lionheart targets approximately 24,000 tons of monohydrate lithium hydroxide annually, Ludwig aims to produce lithium carbonate.
Thus, the company will be able to offer different products for distinct segments of the battery supply chain.
Lithium Will Be Extracted from Geothermal Brine
Vulcan’s model differs from the traditional image of an open-pit lithium mine.
In the Upper Rhine Valley, the company plans to access naturally heated subsurface brines rich in lithium.
First, wells will bring hot brine to the industrial facilities. Then, Vulcan will use its direct lithium extraction, or DLE, technology to extract the mineral dissolved in the fluid.
The process generates a lithium chloride intermediate that can be converted into battery-grade lithium carbonate.
At the same time, the thermal energy present in the brine could be utilized to meet the needs of the company’s processes as well as external consumers.
This combination transforms the same subsurface resource into a source of raw material for batteries and renewable heat.
Europe Rushes to Find Lithium Within Its Own Borders
Vulcan’s expansion comes as European governments attempt to reduce external dependence on critical minerals.
This movement is already visible in various countries.
The CPG has shown that a European lithium deposit in Beauvoir, France, could yield up to 34,000 tons annually and supply batteries for around 700,000 electric cars per year.
The French case and the German project utilize different production methods. However, both reflect the same strategic challenge: to create a European raw material supply chain capable of supporting the continent’s growing battery industry.
In Ludwig, Vulcan is betting on the possibility of producing the mineral within one of Europe’s largest industrial economies.
Ludwig Will Be Just 60 km North of Lionheart
The location represents a significant advantage.
The Ludwig Project will be in the Ludwigshafen area, approximately 60 kilometers north of the Lionheart Project, within the same regional brine system of the Upper Rhine Valley.
Therefore, Vulcan believes it can leverage geological knowledge, technology, drilling experience, engineering, and licensing processes developed during the first phase.
The company also has its own drilling capacity and in-house developed extraction technology.
Thus, Lionheart could serve as a replicable industrial platform for Ludwig and future phases.
Vulcan Anticipates a 15% Reduction in Capital Intensity
This reusability is reflected directly in the numbers.
According to the preliminary study, Ludwig exhibits a capital intensity approximately 15% lower than that of Lionheart, considering equivalent lithium production capacity.
The company attributes this reduction to lessons learned during the first phase, greater technical maturity, and the simplification of the industrial concept.
Additionally, the project aims to integrate extraction and conversion to lithium carbonate in a more concentrated configuration.
Another differentiator lies in energy.
Instead of installing geothermal power generation on-site as a core part of the model, Ludwig will prioritize direct heat supply.
This choice reduces the amount of infrastructure needed.
Project to Produce 3,125 GWh of Renewable Heat Per Year
Heat represents one of the most significant figures in the venture.
Vulcan projects an output of approximately 3,125 GWh of renewable heat annually.
Part of this thermal energy will support its own lithium production processes.
However, the company also intends to sell the surplus to external consumers, including industries and possible regional heating systems.
Therefore, Ludwig will potentially have two complementary commercial fronts: battery-grade lithium and thermal energy.
This strategy also reduces the need to produce electricity on-site and simplifies its industrial setup.
Projected operating cost is €4,101 per ton
Vulcan estimates a C1 operating cost of €4,101 per ton of lithium carbonate equivalent.
According to the company, this figure would place Ludwig in the lower quartile of the global cost curve.
The company attributes this projection primarily to the integrated use of geothermal energy and its proprietary direct extraction technology.
Additionally, the simplified industrial concept is expected to require less infrastructure than the first phase.
However, this cost still needs to be commercially validated.
Ludwig is not yet operational and has not even received a final investment decision. Therefore, the €4,101/ton remains a projection from the feasibility study.
Indicated lithium resources increased by 91%
The new study also updated the scale of the mineral resource.
The indicated resources of Project Ludwig increased by 91%, rising from 655,000 tons to approximately 1.251 million tons of lithium carbonate equivalent.
Meanwhile, inferred resources increased by about 5%, from 2.128 million to approximately 2.230 million tons equivalent.
The considered concentration is approximately 155 milligrams of lithium per liter of geothermal brines.
However, there is an important distinction.
Indicated and inferred mineral resources should not automatically be presented as economically recoverable reserves. They represent geological classifications used in assessing the potential of the deposit.
Vulcan seeks minority investors to share the project
The company does not necessarily intend to finance the entire second phase on its own.
Currently, Vulcan holds approximately 85% of Project Ludwig.
The remaining 15% is linked to investors including Siemens, Hochtief, and DemEA.
Now, the company has initiated a process to incorporate new strategic minority investors directly into the asset.
According to Francis Wedin, CEO of Vulcan, investors from the first phase were predominantly European.
In Ludwig, however, much of the spontaneous interest is coming from Asia.
Asian manufacturers are relocating battery factories to Europe
There is an industrial logic behind this interest.
Asian manufacturers of batteries and electric vehicles are increasing their physical presence within Europe.
CATL, for example, raised approximately US$4.6 billion in Hong Kong in 2025 and reported that a large portion of the funds would help finance its international expansion, including a battery factory in Hungary.
The more battery production capacity is installed on the continent, the greater the need for nearby raw materials becomes.
Thus, owning a stake in a German lithium project can offer strategic advantages for groups interested in reducing logistical distances and supply risks.
Europe attempts to reduce dependence on imported minerals
The European Union has set goals to strengthen its autonomy in critical raw materials.
By 2030, the bloc aims to significantly increase the share of strategic minerals extracted, processed, and recycled within its own economy.
However, conventional mining represents only part of this strategy.
Recycling is also gaining importance.
The CPG showed that Europe has mapped a type of “urban mine” formed by electronics, used batteries, buildings, and old turbines, with the potential to recover more than 55,000 tons of lithium per year by 2050.
Thus, the continent is attempting to tackle the issue from two fronts.
On one side, projects like Ludwig seek to create new primary production within Europe. On the other, circular economy programs aim to recover minerals that have already entered the market.
Germany Also Expands Capacity to Recycle Batteries
The German supply chain is also starting to advance after battery use.
In Meppen, for example, an industrial facility has come online with a capacity to process 30,000 tons of batteries per year.
According to the company responsible for the project, the process can recover up to 96% of the processed materials.
The CPG detailed how Germany opened a large battery recycling plant in Meppen, capable of processing 30,000 tons annually and recovering materials like lithium, nickel, and cobalt.
The combination of these investments is beginning to shape a more complete supply chain.
Projects like Ludwig aim to produce lithium within Germany, while new recycling plants strive to recover the mineral after batteries reach the end of their life cycle.
First Phase Has Already Secured Billion-Euro Funding
Vulcan has an important reference for structuring Ludwig.
The Project Lionheart secured a financing package of approximately €2.2 billion, combining debt and equity.
The German government has also participated in the structure through the Federal Raw Materials Fund.
The fund holds approximately 14% of Lionheart, while Vulcan retains about 86%.
This stake demonstrates how Berlin considers the project strategic for its raw materials policy.
Now, the company is trying to leverage the experience gained in the first phase to structure the financing of Ludwig.
Lionheart Aims for 24,000 Tons Annually
The first phase has different characteristics.
Lionheart intends to achieve a capacity of approximately 24,000 tons per year of battery-grade lithium hydroxide.
According to Vulcan, this volume would be sufficient to supply approximately 500,000 electric vehicle batteries per year, based on the assumptions used by the company.
Additionally, the project is expected to generate renewable energy from the same geothermal brine used in lithium extraction.
Ludwig would expand on this model but produce lithium carbonate.
Two Phases Could Exceed 45,000 Tons Annually
If both projects reach their planned capacities, the combined scale will surpass 45,000 tons of lithium chemicals annually.
Lionheart aims for approximately 24,000 tons of monohydrate lithium hydroxide.
On the other hand, Ludwig forecasts 21,100 tons of battery-grade lithium carbonate.
The mathematical total reaches approximately 45,100 tons per year.
However, the compounds are different. Therefore, this figure serves only to illustrate the combined physical scale of the two operations and should not be presented as 45,100 tons of the same product.
Company aims to launch a new phase every two or three years
Vulcan’s strategy goes beyond Lionheart and Ludwig.
The company controls licenses over approximately 2,000 km² in the Upper Rhine Valley.
Its strategy envisions using this area to develop successive lithium and geothermal energy projects.
The corporate goal is to achieve a new phase of production every two or three years.
In this model, the final investment decision for a new phase would occur after the previous phase begins to produce.
Thus, the operational start of Lionheart will be crucial for Ludwig.
Ludwig has not yet received final investment decision
This is one of the main editorial concerns of the agenda.
The Ludwig Project still does not have a final investment decision, or FID.
Vulcan has completed the preliminary feasibility study and has begun seeking strategic partners.
Now, it still needs to advance in seismic surveys, exploratory drilling, engineering, financial structuring, licensing, and other stages.
The company intends to make the final decision on Ludwig after Lionheart starts producing.
Thus, the €1.26 billion represents the estimated investment needed to develop the project, and not money that is already being fully disbursed for construction.
Drop in shares increases importance of partners
The search for investors is happening at a financially sensitive time for Vulcan.
At the time of the Reuters report, the company’s shares had fallen by approximately 41.5% in 2026 and closed at A$2.61, near their lowest point in the past 52 weeks.
In this context, bringing partners directly into Ludwig allows for a sharing of the financial risk associated with expansion.
In addition to capital, a strategic investor can contribute purchase contracts, technology, industrial experience, or access to the battery market.
Therefore, interest from Asia gains additional importance.
European lithium faces international competition
Vulcan is trying to grow in an extremely competitive market.
China, Australia, Chile, Argentina, and other producers hold significant positions in the global lithium supply chain.
At the same time, Chinese companies have built a highly integrated chain of refining, battery manufacturing, and electric vehicles.
Europe, on the other hand, still heavily relies on materials processed abroad.
Therefore, European projects need to compete not only in mineral availability but also in price.
Vulcan bets on the combination of direct lithium extraction, geothermal energy, and proximity to European customers to try to reduce this gap.
Ludwig plans to position raw material near European factories
The German location holds strategic value.
Germany remains at the heart of the European automotive industry, housing an extensive network of vehicle, component, and chemical manufacturers.
Producing lithium domestically can shorten the distances between raw materials, processing, and industrial consumers.
Moreover, more localized supply chains tend to be less exposed to maritime disruptions and trade disputes.
This logic has gained traction as critical minerals have increasingly taken center stage in Europe’s industrial policies.
Project Links Mining and Geothermal Energy
Ludwig’s differentiator lies in utilizing the same brine for two purposes.
Vulcan aims to extract lithium dissolved in groundwater while simultaneously harnessing the geothermal heat carried by the fluid.
Thus, the project could deliver 21,100 tons of battery-grade lithium carbonate per year and up to 3,125 GWh of renewable heat annually.
This integration creates a potential second source of revenue and reduces reliance on fossil fuels in thermal processes.
Additionally, selling heat to regional consumers could enhance the economic efficiency of the venture.
First Phase Still Needs to Prove Commercial Model
Despite positive projections, one critical point remains.
Vulcan’s first major industrial phase still needs to demonstrate that the model works commercially at the planned scale.
Lionheart will serve as a benchmark for investors, banks, and buyers.
If the operation achieves the expected costs, volumes, and efficiency, Ludwig could directly benefit from this experience.
On the other hand, any delays, cost increases, or technical issues in the first phase could also impact the second.
This explains why Vulcan conditions Ludwig’s FID on the successful start of production at Lionheart.
Asian Interest May Finance Next Stage of German Lithium
Project Ludwig emerges at the intersection of two transformations.
Europe aims to reduce its external dependence on critical minerals, while Asian battery manufacturers are establishing industrial capacity closer to European automakers.
In this context, Vulcan offers an asset that combines lithium produced in Germany, geothermal energy, and proximity to the battery industry.
The project foresees €1.26 billion in investments, a capacity of 21,100 tons of battery-grade lithium carbonate per year, production of 3,125 GWh of renewable heat, and a planned operational life of three decades.
Additionally, the company estimates a capital intensity 15% lower compared to the first phase, considering equivalent capacity.
Now, however, the challenge lies in finance and operations.
Vulcan needs to convert the interest of European and Asian investors into capital and, before making a final decision on Ludwig, demonstrate that Lionheart can operate at the anticipated commercial scale.
If the strategy advances, a warm brine hidden underground in Germany could simultaneously support the European battery supply chain and regional renewable heat systems.
Do you believe that producing lithium within Germany using geothermal energy can significantly reduce Europe’s dependence on the Asian supply chain, or will costs remain the main hurdle?
