European Lithium’s Strategic Pivot: A Major Partnership Reshapes Rare Earths Supply

Following a trading halt, European Lithium has returned to the market with a significantly broadened strategic outlook in the critical minerals sector. The catalyst is a new joint venture established by its Nasdaq-listed holding, Critical Metals Corp, with a state-owned Romanian nuclear entity. While the immediate share price movement is noted, the more substantial development is the potential transformation of the company's role within Europe's rare earths supply chain.

The announcement arrives amid improving sentiment for lithium and other critical materials. In China, lithium carbonate futures recently touched 95,200 yuan per tonne (approximately $13,400), marking an 18-month high. Major producer Ganfeng Lithium anticipates global demand to surge by 30–40% by 2026. This backdrop underscores the strategic timing of European Lithium's latest move.

Trading in European Lithium shares on the ASX was suspended on December 9, pending the release of this offtake announcement. Trading on Frankfurt's Xetra resumed yesterday at 08:05 CET. Prior to the suspension, the stock closed at AUD 0.190, a 5% decline from the previous session. However, the shares remain up more than 350% year-to-date, reflecting the heightened investor focus on critical resource companies.

The Romanian Joint Venture: Building a European Pipeline

Critical Metals Corp has executed a term sheet agreement for a 50/50 joint venture with Fabrica de Prelucrare a Concentratelor de Uraniu S.R.L. (FPCU), a subsidiary of the Romanian state nuclear company, Nuclearelectrica. This partnership is a deliberate step toward creating a European-centric value chain for rare earths, independent of Asian processing dominance.

Key elements of the joint venture include:

• Non-Capital Intensive Model: Critical Metals retains its 50% stake without requiring any equity or debt contributions.
• Secured Long-Term Supply: The JV secures 50% of the future production from the Tanbreez rare earths project in Greenland for its entire lifespan.
• High-Value End Use: The partnership plans to manufacture magnets in Romania meeting aerospace and military-grade specifications.
• EU Funding Access: Both parties intend to apply for financing from the EU's €3.5 billion package dedicated to critical raw materials projects.

This agreement significantly bolsters the offtake profile for the Tanbreez project. With existing agreements with UCORE (10%) and ReAlloys (15%), a total of 75% of the project's anticipated future production is now under contract.

Should investors sell immediately? Or is it worth buying European Lithium?

Portfolio Valuation and Corporate Structure

European Lithium's current valuation is heavily supported by its stake in Critical Metals Corp. The company holds 53,036,338 shares, representing approximately 45% of Critical Metals. Based on Critical Metals' closing share price of $10.33 on December 9, this stake is valued at roughly $548 million (approximately AUD 827 million).

Executive Chairman Tony Sage highlighted the company's consolidated financial position, which features:

• Cash Holdings: Approximately $200 million
• Liquid Critical Metals Stock: Valued at around $800 million
• Additional Assets in Ireland and Ukraine: Not included in the above figures

The company reports a combined liquidity position of about AUD 325 million.

Project Development and Next Steps

Concurrently, Critical Metals is working to refine the processing technology for the Tanbreez project. The objective is to increase the total rare earth oxide (TREO) content of the eudialyte concentrate from the current 2.2–2.5% to over 3%. An updated feasibility study reflecting this process enhancement is expected by the end of the first quarter of 2026.

The geopolitical significance of this venture was emphasized by Romania's Energy Minister, who stated the cooperation positions the country "at the center of a fully integrated, Western-oriented supply chain." China currently controls over 80% of global rare earths processing capacity.

For European Lithium and Critical Metals, the next crucial milestone will be the delivery of the revised feasibility study in Q1 2026. Its findings will be fundamental for assessing the full potential of the newly secured offtake agreements and the ambitious European processing plans.