Why the Vulcan (ASX:VUL) share price is on watch

The Vulcan Energy Resources Ltd (ASX:VUL) share price is on watch as the company's German plant for lithium extraction is operational.

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The Vulcan Energy Resources Ltd (ASX: VUL) share price will be one to watch when trading opens this morning. The company announced its German pilot plant for lithium extraction is now operational.

Shares in the zero-carbon lithium producer ended Friday's trading session at $6.36 – up 1.76%. By comparison, the S&P/ASX 200 Index (ASX: XJO) ended 0.051% lower on Friday.

Let's take a closer look at today's announcement.

How will the Vulcan share price respond to today's news?

In a statement to the ASX, Vulcan Energy says its direct lithium extraction (DLE) pilot plant in Germany's Upper Rhine Valley is now fully operational. The plant's purpose is to prove the feasibility of extracting lithium from geothermal brine.

Data from the pilot plant will be used to ultimately decided whether a larger-scale DLE plant can be made operational.

Today's news comes after the company came to an agreement with DuPont de Nemours Inc (NYSE: DD) to "advance" DLE. In other recent news that sent the Vulcan share price soaring, last month the company announced the appointment of a CO2 expert to its board. As well, Vulcan announced in late March it would trace its carbon footprint across its supply chain. A first for the lithium industry.

Management commentary

Vulcan managing director Dr Francis Wedin spoke on today's announcement, saying:

Getting our Pilot Plant up and running on live geothermal brine is a significant milestone for Vulcan. This has already started producing crucial data needed for de-risking the lithium extraction process.

This is a critical step towards our strategy of producing lithium hydroxide, using our unique Zero Carbon Lithium™ process, for the European battery electric vehicle market, and building a combined renewable energy and chemicals business. We look forward to keeping our shareholders informed as we progress our efforts.

Vulcan share price snapshot

The Vulcan share price has increased an amazing 2665.22% over the last 12 months. It, along with other ASX companies, has been a beneficiary of huge growth in lithium demand. Lithium is currently trading for US $90,000 per tonne on the commodities market – a 52-week record.

Demand for lithium is increasing as demand for electric vehicles surges.

Vulcan Energy has a market capitalisation of $683.5 million.

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Motley Fool contributor Marc Sidarous has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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