Pilbara Minerals building presence in mid, downstream lithium, CEO says | Hotter Commodities

Pilbara Minerals will start to commission its joint-venture lithium hydroxide facility with Posco Holdings late in the current quarter, and will ramp-up activity through next year, the company’s chief executive officer has said

Dale Henderson told Fastmarkets in a recent interview that the joint-venture team for the project, located in Gwangyang, South Korea, was currently busy in the build-out phase, intending to start to commission the first train soon.

Next year, Henderson said, will be about more commissioning and ramp-up. Train 1 of the chemical facility is designed to produce 21,000 tonnes per year of lithium hydroxide when it reaches nameplate capacity.

“Being a participant in a hydroxide facility delivers on the long-term objective we have had from the inception of the business, which is that we wanted to be a participant in lithium chemical conversion,” he said. “The bones of that deal with Posco were struck in early 2018, and here we are in 2023, with the dream coming to life.”

The facility is owned and operated by the Posco Pilbara Lithium Solution Co Ltd (PPLS), a joint venture in which Posco Holdings has an 82% stake and Pilbara Minerals owns the remaining 18%. The Australian company, based in Perth, has the option to increase its equity interest to 30% at any time as much as 18 months after the facility successfully ramps-up to 90% of its nameplate capacity.

Pilbara Minerals operates the Pilgangoora hard-rock lithium operation in Western Australia’s Pilbara region. Henderson said that the move into the lithium hydroxide downstream processing sector was part of its long-term view of partnerships.

“Different approaches are being deployed for chemicals throughout, ranging from some groups doing it themselves, others working in partnership, and others not pursuing processing at all, but preferring to sell raw materials,” he told Fastmarkets.

“The view we have held for a long time is that we think being in downstream with the right partner makes good sense for three key reasons,” he added.

“The first is that we think, if it is with the right partner and the right proposition, there should be some good economic benefit,” he said. “The second is the strength, which comes from integration, which provides a stronger co-dependence capability to navigate inevitable down-cycles. And the third key benefit is diversification across alternate markets.”

PPLS is expected to enter into several lithium hydroxide offtake agreements with South Korean and international customers over the coming months, including an offtake agreement on arm’s-length commercial terms with Posco Future M, a lithium cathode producer which is around 60% owned by Posco Holdings.

Fastmarkets’ daily price assessment for lithium hydroxide monohydrate LiOH.H2O 56.5% LiOH min, battery grade, spot price cif China, Japan & Korea, was unchanged at $17-18 per kg on December 7, but down by almost 80% from $83-84 per kg in the first assessment this year on January 3.

Calix joint venture

Pilbara Minerals is meanwhile working with Australia-based Calix Ltd to build a mid-stream demonstration plant project at the Pilgangoora operation.

The aim of the project, partially funded with a grant of A$20 million ($13.15 million) from an Australian Government Modern Manufacturing Initiative (MMI), is to show the potential for renewably powered processing of spodumene at the mine site, using Calix’s technology.

“We are pursuing the idea that we should be able to add more value at the mine site and produce an intermediate product for market that is higher in lithium concentration than spodumene concentrate,” Henderson said.

According to Henderson, by producing spodumene concentrate and putting it through a couple of additional processing steps at the mine site, the result is a lithium salt product without the aluminium silicate waste which would normally be present in the concentrate.

The goal is to complete these processing steps through more sustainable methods, which is where Calix’ electric calciner technology comes in, he said.

“We think there’s potential to have a vastly concentrated lithium product with zero waste and reduced carbon energy intensity,” he added.

The proposed mid-stream plant will have full production capacity for more than 3,000 tonnes per year of concentrated lithium-phosphate salt product from a feedstock of around 27,000 tpy of spodumene, including lower-grade fine spodumene concentrate.

“So far, it looks good on paper, the studies have been great, and we’re now taking the next step to build a large demonstration processing plant. We approved that final investment decision in [the July-September] quarter,” Henderson said. “Following this, we’ll start to build the demonstration plant this financial year, and we plan to bring the plant online in the March quarter of 2025.”

Pilbara Minerals intends to commercialize the technology for application at the Pilgangoora operation as well as to license it across the lithium industry through a commercialization venture with Calix.

“It is a bit of a game-changer,” Henderson said, “not only by reducing carbon intensity but also by reducing shipment of waste. If it works out well, we will be able not only to change our operation at Pilgangoora but to deploy it industry-wide.”

Pilgangoora growth

Expansions are under way at Pilbara Minerals’ 100%-owned Pilgangoora operation, located 120km from Port Hedland. It is one of the largest hard-rock lithium deposits in the world.

The company upgraded Pilgangoora’s stated reserves last quarter by 35%, increasing mine life by nine years to 34 years.

The mine consists of two processing plants. These are the Pilgan plant, which produces spodumene concentrate with tantalite concentrates as a byproduct, and the Ngungaju plant, which produces a spodumene concentrate.

The P680 expansion, which has now achieved first ore, will boost total production capacity to 640,000-680,000 tpy of spodumene concentrate. It has already led to a 64% increase in spodumene concentrate production volumes to 620,000 tonnes in the 2023 financial year, equivalent to roughly 8% of global lithium supply, compared with 378,000 tonnes the year before.

The P1000 project, which is targeting first ore in the third quarter of fiscal 2025, will further increase the nameplate capacity run rate to 1 million tpy.

And there were plans to grow further, Henderson said.

“We like the idea of going bigger again, if we can, and have a study under way looking at going beyond the P680 and P1000 expansion projects, which is due to be delivered in the June quarter of 2024,” Henderson told Fastmarkets. “So, when we think about our priorities, it’s all trained around how we can accelerate value creation for our shareholders and stakeholders.”

According to Henderson, the company’s strategy consists of four planks, with the first priority being the operating platform. The other priorities, he said, are mine expansions, growth in chemicals processing, and future growth beyond the Pilgangoora asset.

Pilbara Minerals planned to allocate as much as 300,000 tpy of future annual spodumene concentrate production from the P1000 expansion to a downstream lithium conversion facility, and was seeking a partner for the project, Henderson said.

“We’re busy having discussions,” he added. “At the start of the process, we quite intentionally were quite open to the full market.”

A broad spectrum of parties indicated their interest, he said, including car manufacturers, cathode makers, entrepreneurial groups and chemical companies that were already in the industry as well as new groups wanting to enter. A location for the conversion facility will be mutually agreed, Henderson said.

“We’re progressing a short list of partners with a view to updating the market in the March quarter of 2024,” he added.

M&A

While the lithium industry is amid a flurry of mergers and acquisitions, particularly in Australia, Henderson said that Pilbara Minerals was not rushing to enter the fray.

“Inorganic growth falls under plank four of our strategy, so M&A is definitely part of what we’ve contemplated in terms of a strategy for the business,” he told Fastmarkets.

“We’ve been careful not to characterize our intentions in the space, instead positioning ourselves by building that muscle in the business. We think it’s the right maturity step for where we are in the business,” he added.

“Pilbara Minerals is in no rush to do a deal – and we won’t do a deal for a deal’s sake. But equally, if the right prospect comes along, that we think is accretive for our shareholders, and we can leverage our strengths for a great outcome for our shareholders, then we’re up for that,” he said.

“I like to think we’ve been a disciplined operator and maybe somewhat more cautious than some of the other groups out there, but I see that as a strength,” he added.

At this stage, Henderson said that it was unlikely that Pilbara Minerals would move into minerals other than lithium.

“We have not ruled out moving into other areas,” he said, “but it’s certainly not a focus at this time. At this stage, the board is very open to all ideas, but it has just not been a focus, given that we’ve got a full plate with our organic profile.

“However,” he added, “the strength we have with hard rock lithium mining means that it could make sense to leverage that strength into another commodity one day.”

In Hotter Commodities, special correspondent Andrea Hotter covers some of the biggest stories impacting the natural resources sector. Sign up today to receive Andrea’s content as it is published.

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