Pilbara Minerals will own 30% of the project under the option, which comes from a non-binding memorandum of understanding signed on January 2, 2019, proposing to build this processing plant. The plant will be located in Gwangyang Free Economic Zone in South Korea and will use Posco’s PosLX processing technology capable of producing battery-grade lithium carbonate and lithium hydroxide.

Posco’s PosLX technology is currently used at its existing plant in Gwagyang, South Korea, which has a production capacity of up to 2,500 tpy of lithium compounds.

Since October 2018, Posco has been using Pilbara Minerals' lithium spodumene produced from the Pilgangoora Project in Western Australia as feedstock for conversion in battery-grade lithium chemicals. The new plant is anticipated to keep using the same material.

Pilbara Minerals produced 47,859 tonnes of lithium spodumene, min 6%, at its Pilgangoora Project in the final quarter of 2018, up from 11,015 tonnes in the third quarter.

Pilgangoora's first phase from June 2018 to 2020 has a production target of 330,000 tpy of lithium spodumene min 6%, the equivalent of 43,000 tpy of lithium compounds.

"For Pilbara Minerals to have secured a strong and technically capable partner like Posco is no mean feat and gives us an exciting opportunity to partner with them to enter the battery grade and cathode material product supply market and become a fully vertically integrated global lithium raw materials company," Pilbara Minerals’ managing director and chief executive officer, Ken Brinsden, said in a press release.

Pilbara Minerals has not specified when new plant will be built and brought into production. The exercised option will be subject to due diligence, development of a financing package, approval of both companies’ boards and execution of final and binding joint venture terms.

Pilbara Minerals' board is expected to make a final decision by May 2019.