Pilbara Minerals signs additional spodumene offtake with China’s Yibin Tianyi

Australian lithium spodumene concentrate producer Pilbara Minerals has agreed to an additional offtake agreement with Chinese lithium producer Yibin Tianyi, it said on Monday March 15.

Yibin Tianyi will purchase spodumene concentrate from Pilbara Minerals’ Pilgangoora lithium-tantalum project in Western Australia in an offtake agreement that includes a $15 million prepayment.

Yibin Tianyi will provide a $15 million unsecured prepayment to fund the stage 1 improvement works on Pilbara’s existing Pilgangoora Project processing plant, which in turn, Pilbara will repay over a three-year period with no interest payable by providing the additional offtake of a further 40,000 tonnes per year of spodumene concentrate from its increased production capacity from the project.

Pilbara said the stage 1 improvement works have been scheduled to commence on site this month, and the commissioning is expected to begin in the September quarter of 2021. The improvement works will increase production capacity by 30,000 to 50,000 tpy. Shipments of this additional supply under the agreement will start either late in 2021 or early 2022.

This new offtake is in addition to and will be incorporated into the existing 75,000 tpy five-year offtake agreement announced on March 25, 2020.

Pilbara Minerals’ managing director and chief executive officer Ken Brinsden highlighted the strategic value of the additional supply agreement: “For Yibin Tianyi, [this additional offtake agreement will allow it] to become one of the biggest lithium chemical suppliers in China with the support of our major shareholder, CATL and for us to become one of the largest, lowest cost lithium raw material suppliers in the world.”

Demand for lithium has gradually improved since late last year and lithium producers have started to acquire more spodumene supply to guarantee future production. This has led to increased demand for spoduemene in the market.

Surging lithium prices have underpinned an uptrend in spodumene prices since late 2020, and this has been strengthened by tight supply, strong demand from China’s lithium producers and bullish sentiment for the rest of 2021 as a result of increased customer inquiries.

Fastmarkets’ monthly price assessment for spodumene min 6% Li2O, cif China was $500-520 per tonne on February 24, up by $50-60 per tonne from $450-460 per tonne a month earlier. Prices fell to record lows of $360-390 per tonne in October last year before they started to recover a month later.

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