Atlas Iron has made a lithium deal with Pilbara Minerals as part of the iron ore company’s diversification strategy.
The deal will see Atlas purchase 1-1.5 million tonnes of lithium direct shipping ore (DSO) from Pilbara Minerals; as part of the agreement, Pilbara Minerals will mine the ore at its Pilgangoora lithium project in the Pilbara, Western Australia, and Atlas will deliver and process it using its existing infrastructure.
Atlas is expected to make around $15–20 of profit per tonne, and will purchase the ore over a 15-month period starting from June 2018 (the deal being subject to port approvals and other finalisation).
“This deal is another significant step forward for our business,” said Cliff Lawrenson, Atlas managing director. “It enables us to leverage our existing assets, including the crusher and port facilities, and utilise our corporate infrastructure.
“We are pleased to find an opportunity to create value through common sense infrastructure sharing in the Pilbara. This is the first revenue-earning agreement we have reached as part of our diversification strategy and it will not be the last.”
Pilbara Minerals managing director and chief executive officer Ken Brinsden stated that the deal would give the company an opportunity to generate upfront cash-flow while building on its long-term focus as a high-quality spodumene concentrate supplier.
“The ability to generate early cash-flow is a significant bonus for any resource company in the commissioning and ramp-up phase,” he explained.
“This agreement is also consistent with our desire to support the rapid growth of the lithium-iron supply chain, and to benefit from the very strong prices being realised in the lithium DSO market.”