ASX-listed lithium producer Vulcan Energy Resources has secured up to A$200m ($126.8m) in a conditional, non-binding letter of support from Export Finance Australia (EFA).

The financing will support phase one of Vulcan’s zero-carbon lithium project in Upper Rhine Valley, Germany.

For the first phase, project-level debt and strategic equity financing will be initiated in the middle of next month, once the bridging study is done.

This phase’s financing process has been timed to be concurrent with public funding applications in Germany.

The company has also secured in-principle government-backed support from several export credit agencies (ECA), including those of France, Canada and Italy. This support is subject to customary conditions.

After the fulfilment of the customary conditions and financing terms, the letter of support from Australia can be converted into a binding agreement.

Vulcan Energy Resources managing director and CEO Cris Moreno said: “Noting the deepening relationship between Australia and the EU as part of the international push to develop and secure global supply chains for clean energy critical minerals, it is encouraging that we have secured substantial in principle financing support from government-backed export credit agencies both in Europe and in Australia.”

“EFA’s letter of support is encouraging and follows our successful market-sounding conducted in the last few months, which has seen strong commercial and development bank support, as well as substantial in-principle ECA support for phase one. This signal of confidence is timely and strengthens our position as we enter our project-level debt and equity financing for phase one of the zero-carbon lithium project in November.

“This is a tangible and powerful symbol of the sort of Australia – EU links sought as part of the Minerals Security Partnership, which includes Australia, Germany, France, the European Commission and the USA.”

The zero-carbon lithium project’s goal is to decarbonise the production of lithium. The company is developing the first net carbon neutral, zero fossil fuels business, where lithium and geothermal energy are co-produced on a large scale.

This project will deploy existing technologies to extract lithium from geothermal brine, producing sustainable lithium for Europe.

Vulcan published a definitive feasibility study related to the phase one work in February 2023.

The study has an estimated lithium hydroxide monohydrate production of around 24,000 tonnes per annum in this phase.

In August 2023, the company began commissioning its lithium extraction plant in the Upper Rhine Valley, which will extract, purify and increase lithium chloride concentration from brine.