European Lithium’s Strategic Pivot Gains Momentum

European Lithium AU000000EUR7

Shareholders of European Lithium are entering the new year with significant optimism, driven by the company's evolving investment thesis. The primary catalyst is its majority stake in Critical Metals Corp., which has established definitive first-quarter objectives for the Tanbreez rare earths project in Greenland. Concurrently, the company's former flagship asset, the Wolfsberg lithium project, remains on hold, underscoring a strategic shift toward the rare earths sector.

Critical Metals is in advanced financing discussions with potential investors from several Gulf states, including Saudi Arabia, Qatar, Bahrain, Oman, and the United Arab Emirates. These nations are expanding their rare earth processing capabilities, benefiting from comparatively lower energy costs and often faster permitting processes than those in Western jurisdictions.

Furthermore, the company remains open to direct investment from the U.S. government. Representatives from the previous Trump administration had previously engaged in talks regarding a potential stake. Support under the U.S. Defense Production Act is explicitly considered a viable option.

Tanbreez Off-Take Agreements Near Finalization

A key near-term milestone is the finalization of remaining off-take agreements for the Tanbreez project. Critical Metals' CEO, Tony Sage, reported that approximately 75% of the planned production has already been pre-sold to buyers across the United States and Europe. The company aims to secure binding contracts for the outstanding 25% within the first quarter of 2026, maintaining a deliberate geographic spread to mitigate geopolitical supply risks.

This progress is directly relevant to European Lithium, which holds roughly 60 million shares in Nasdaq-listed Critical Metals. The strategic direction of European Lithium is now closely tied to its subsidiary's rare earths strategy, following the official de-prioritization of the Wolfsberg lithium asset.

Wolfsberg Project Remains Dormant

The Wolfsberg lithium project in Austria, once European Lithium's core asset, continues to be suspended indefinitely. According to Sage, a reassessment of development will only occur once lithium prices demonstrate a substantial and sustained recovery. With prices down approximately 90% from their 2022 peak, a near-term reactivation appears unlikely.

This strategic redirection exemplifies the challenging market conditions that forced numerous lithium developers to reevaluate their investment plans throughout 2025.

Project Timeline, Costs, and European Joint Venture

Critical Metals has outlined an ambitious schedule for Tanbreez, targeting the start of mining operations in 2027, with first production anticipated by mid-2028. The estimated capital expenditure for the Greenland mining activities is approximately $500 million. An additional $1 billion-plus is earmarked for downstream processing capacity.

In a significant move for its European presence, the company recently signed a term sheet for a 50/50 joint venture with Romanian firm FPCU. The partnership aims to establish a fully integrated supply chain, from mine to processed rare earths, within the Western economic sphere.

EU-Based Processing Plant Announced

On December 9, the joint venture to construct a state-of-the-art rare earths processing plant inside the European Union was formally announced. Both Critical Metals and the Romanian government have applied for funding from a new €3.5 billion EU program designed to secure critical raw material supplies.

Share Performance and Market Context

European Lithium's shares closed yesterday at A$0.155. This price represents a gain of roughly 281% year-to-date from its opening level of A$0.042 at the start of the year. The stock reached a 52-week high of A$0.485 before retracing in a more volatile market environment.

The company's current market capitalization stands at about A$266 million. The average daily trading volume for 2025 has been around 7.7 million shares.

Lithium Market Shows Early Signs of Firming

Despite the current strategic focus on rare earths, the lithium sector is displaying initial signals of stabilization. Chinese lithium carbonate prices increased by more than 20% during December. Some market analysts project average prices around $17,000 per tonne for 2026.

Major producer Ganfeng Lithium anticipates global demand growth of 30-40% in 2026. In the long term, this could provide a foundation for re-evaluating the timeline for the Wolfsberg project.

Critical Q1 2026 Milestones

The first quarter of 2026 presents several clearly defined catalysts for European Lithium investors:

• Tanbreez Off-Take: Securing binding contracts for the remaining 25% of production volume.
• U.S. Government Decision: Potential support or equity participation under the Defense Production Act.
• Middle East Financing: Concrete commitments from investors in the Gulf region.
• Tanbreez Project Development: Updated studies, cost assumptions, and schedules by quarter-end.

At the November 2025 Annual General Meeting, shareholders endorsed the company's strategic direction. Additionally, Mykhailo Zhernov was elected as a Class-I Director to the Critical Metals board, further solidifying the alignment of strategic interests between the two companies.