Pilbara agrees terms with Posco for Li joint venture

Perth-based lithium producer Pilbara Minerals has agreed binding terms with South Korean conglomerate Posco for the development of a 40,000 t/yr lithium hydroxide and lithium carbonate conversion facility.

The joint venture, which is to be established at the Gwanyang free trade zone in South Korea where Posco is developing a battery materials park, will initially be 21pc owned by Pilbara and 79pc owned by Posco. Pilbara will have the option to increase its interest to 30pc.

Pilbara will supply up to 315,000 t/yr of lithium concentrate from its Pilgangoora project in Western Australia, while Posco will utilise its proprietary PosLX purification technology to produce high-grade lithium hydroxide and carbonate.

The two companies had previously contemplated a 30,000 t/yr facility, but this was increased to 40,000 t/yr. In recognition of Pilbara increasing its lithium concentrate contribution to 315,000 t/yr from 240,000 t/yr, the joint venture will make a prepayment of $25mn to Pilbara, which will go towards funding the second stage of the Pilgangoora project.

Posco has already developed a 2,500 t/yr demonstration plant in South Korea, which has proven the technical and economic feasibility of a commercial plant. Final agreement for the 40,000 t/yr facility is expected by the end of this year. If the go-ahead is given construction is expected to start in December, with commissioning likely in mid-2021.

In a separate announcement, Pilbara said it has closed a partnership process in which it was seeking to sell up to 49pc of its Pilgangoora project. It received significant interest and some proposals but valuations were not appropriate, considering the size and scope of Pilgangoora as one of the world's main hard rock lithium projects.

Pilbara will continue to progress optimised expansion studies for the second stage of Pilgangoora, which is aimed at increasing ore processing to 5mn t/yr to produce around 800,000 t/yr of lithium concentrate. Stage one is ramping up to 330,000 t/yr.

Underlining the weakness in the lithium market, the company said it has reduced its expected July-September lithium concentrate sales guidance to 20,000-35,000 dry metric tonnes (dmt) at a price of $560-600/t because of chemical conversion delays at its Chinese offtake partners. Prices have fallen by around 30pc this year. It expects sales to rise to 65,000-80,000dmt in the October-December quarter.