News: VUL UPDATE 1-Carmaker Stellantis to take 8% stake in lithium supplier Vulcan

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June 24 (Reuters) - Carmaker Stellantis STLA.MI will invest 50 million euros ($52 million) to buy a 8% stake in miner Vulcan Energy Resources (VUL) , becoming its second largest shareholder and extending to 10 years a supply agreement for climate-friendly lithium.

Vulcan, a German-Australian start-up, is one of a number of companies testing a direct lithium extraction (DLE) method that uses less land and groundwater, making it more sustainable than the most-common open-pit mines and brine evaporation ponds.

Stellantis Chief Executive Carlos Tavares said on Friday the deal was part of the automaker's strategy to form strong relationships with partners amid a collective effort to fight global warming and provide clean, safe and affordable transport.

"Making this highly strategic investment in a leading lithium company will help us create a resilient and sustainable value chain for our European electric vehicle battery production," he said in a statement.

Stellantis, the owner of brands including Jeep, Peugeot, Fiat, Citroen, Maserati and Opel, has a plan to for battery electric vehicles to make up 100% of its European passenger car sales by 2030.

In November last year, Vulcan and the Italian-French group had signed an initial binding deal to supply between 81,000 and 99,000 tonnes of battery-grade lithium hydroxide from Germany to Stellantis for five years from 2026.

Australia-headquartered Vulcan said in a statement it would issue about 8.5 million shares to Stellantis at A$6.622 per share, representing a 32.4% premium to the stock's Thursday closing price. Its shares closed Friday's session up 26.8%.

Vulcan, which now has lithium supply deals with French automaker Renault SA RENA.PA , Belgian recycling group Umicore NV UMI.BR and South Korea's LG Chem Ltd 051910.KS , said it would use the proceeds to expand drilling at its lithium-extraction project in the Upper Rhine Valley, Germany.

($1 = 0.9492 euros)