Vulcan Energy Resources has begun construction on its Lionheart lithium processing facility outside Frankfurt, marking a significant milestone for a project that has become one of the most strategically significant critical minerals investments in Europe as the continent scrambles to reduce dependence on Chinese supply chains and cope with a second major energy shock in four years.
The first stage of Lionheart, backed by Gina Rinehart and due for completion in 2028, will produce 24,000 tonnes per year of lithium hydroxide monohydrate — sufficient to supply batteries for around 500,000 electric vehicles annually. The project’s process is more chemical than conventional mining: hot, briny water is pumped from underground reservoirs in Landau, approximately two hours from Frankfurt, transported to the processing centre and subjected to electrolysis to extract lithium. The geothermal heat from the same water provides an additional energy stream that offsets much of the production cost and emissions.
It is that energy advantage that Vulcan chief executive Cris Moreno describes as Lionheart’s competitive edge. “When you look at most lithium-like supply chains, with the biggest cost of production, the one single factor is energy,” Moreno said. “That energy in that brine effectively gives us all the energy we need to develop the entire process, so we’re not buying energy” — allowing the company to compete on cost against Chinese producers despite operating in one of the world’s most expensive labour markets.
The project has attracted a striking roster of institutional and strategic backers, reflecting its importance to European supply chain policy. The German government has invested €150 million through its Raw Materials Fund administered by KfW, which has also taken a €50 million equity stake in Arafura Rare Earths, another Australian critical minerals company. The European Investment Bank has emerged as Lionheart’s largest lender, committing €250 million. Stellantis, the world’s fifth-largest automaker, holds a stake in the project. KfW’s head of equity investments Jan Klasen noted the development bank has shifted its critical minerals approach from debt financing to direct equity participation, describing critical minerals as “a scarce resource” that warranted the government deploying its most powerful tools.
The war in Iran — which has inflicted a second major energy shock on European consumers in little more than four years after Russia’s invasion of Ukraine — has only intensified the urgency. The EU-Australia free trade agreement, recently concluded, removes all tariffs on Australian mineral exports to the EU and prohibits dual pricing structures. Brussels has also unveiled its RESourceEU plan targeting €3 billion in mobilised investment over twelve months for projects prioritising materials for magnets, batteries and defence.
Analysts and policymakers are careful to note, however, that domestic production alone cannot solve Europe’s supply challenge. “Even if Europe develops more of its own mining, refining, processing and recycling, it will almost certainly continue to source a substantial share of critical materials from abroad,” said Petya Barzilska of the European Initiative for Energy Security, who argued that Europe had not necessarily been slower than other regions but had simply built its economic model around efficiency rather than resilience — a trade-off that now requires urgent correction.
