Most ASX lithium stocks have been stuck in the doldrums again this year.

But the same cannot be said for Vulcan Energy Resources Ltd (ASX: VUL) shares.

This lithium developer's shares have been on a tear this year and have continued this positive run on Thursday.

So much so, Vulcan Energy's shares have just climbed 7% to a devilish new 52-week high of $6.66.

Why is this ASX lithium stock scaling new heights today?

Investors have been fighting to get hold of the company's shares this morning after it announced a deal with one of the world's largest chemical producers, BASF.

According to the release, the two parties have entered into a staged agreement to collaborate on the development of a renewable geothermal heat project to supply BASF with baseload heat.

In addition, the agreement incorporates the potential construction of a commercial Lithium Extraction Plant in Ludwigshafen, BASF's global headquarters and home to the largest integrated chemical complex globally.

This plant would produce lithium salts concentrate following energy production from the hot brine. It would then be transported to Vulcan's Central Lithium Plant to produce battery grade lithium hydroxide for Europe's electric vehicle (EV) market.

Management notes that Vulcan will be the active project developer and integrated operator across the heat and lithium production facilities and would retain 100% ownership of the lithium production.

The agreement continues until the earlier of five years, execution of formal written agreements for the LDP or termination.

Management commentary

The ASX lithium stock's managing director and CEO, Cris Moreno, was pleased with the agreement. He said:

Partnering with Germany's largest chemical company, BASF, to provide renewable geothermal heat at their Ludwigshafen headquarters is an excellent demonstration of Vulcan Energy's dual commitment to decarbonise energy and lithium production via our integrated business approach.

This collaboration highlights how geothermal renewable energy and carbon neutral lithium production can work harmoniously together, delivering mutual benefits for industry and communities. This agreement represents a strategic partnership between BASF and Vulcan, setting the course and providing a blueprint for advancing long term geothermal renewable energy production across the Upper Rhine Valley, while delivering battery- grade lithium product to drive Europe's transition to green electromobility.

BASF President of European Verbund Sites, Uwe Liebelt, adds:

We want to supply our Ludwigshafen site with C-free steam in the future. In addition to harnessing the waste heat from our production facilities, where possible, we want to consider renewable heat sources from geothermal structures.

The ASX lithium stock is now up over 150% since this time last year following today's gain.