Pilbara advances lithium output expansion plans

Australia-based lithium developer Pilbara Minerals has taken another step towards expanding its Pilgangoora project in Western Australia to a 5mn t/yr operation producing at least 800,000 t/yr of 6pc lithium concentrate and 800,000 lb/yr of tantalum.

It has completed a definitive feasibility study that indicates that the expansion can generate life of mine revenue of around A$12.2bn ($8.9bn) over a mine lifespan of 17 years with capital expenditure estimated at A$231mn.

Cash costs are estimated at $233/t for the first five years after ramp-up of the second stage with life of mine cash costs estimated at $263/t. Life of mine revenues have been based on an average lithium concentrate price of $633/t, well below current prices of $900-960/t.

Stage one of the Pilgangoora project has started producing concentrate and will make its first offtake shipment later this month. The first stage will process 2mn t/yr for around 330,000 t/yr of lithium concentrate and over 300,000 lb/yr of tantalum.

Support for the expansion has come from Chinese offtake partners Ganfeng Lithium and Great Wall Motors with commitments of up to $100mn in debt or prepayments, as well as an A$80mn equity investment by South Korean steel producer Posco in April.

Stage two of Pilgangoora will include a 3mn t/yr processing train for lithium concentrate and a tantalum dressing facility, as well as upgrades to power and water facilities.

Stage one involves offtake agreements with Ganfeng Lithium for 160,000 t/yr and General Lithium with 140,000 t/yr, while stage two will be underpinned by agreements with Great Wall Motors for up to 150,000 t/yr and Posco for up to 240,000 t/yr. The Posco agreement includes 80,000 t/yr for the life of the mine and an additional 160,000 t/yr if Pilbara and Posco develop a joint venture in South Korea to produce 30,000 t/yr of lithium hydroxide.

"Our ability to rapidly scale up spodumene concentrate production to over 800,000 t/yr plays perfectly into our downstream value adding strategy of continuing to grow with our customers, and supports the proposed joint venture with Posco," said Pilbara chief executive Ken Brinsden.

The 5mn t/yr Pilgangoora project expansion will position Pilbara to meet rising demand for lithium raw materials globally, particularly through northeast Asia.

Stage one and stage two of Pilgangoora are based on an ore reserve of 80.3mn grading 1.27pc lithium oxide and 123 parts per million tantalum pentoxide. It is expected that the ore reserve will be upgraded after a recent increase in mineral resources.

A final investment decision on Pilgangoora's expansion is expected in late September. If the go-ahead is given by the board of directors, construction is scheduled to start in November with first production expected in the fourth quarter of 2019.