Pilbara Minerals has finalised its agreement with POSCO to proceed with the development of a 40,000 tonnes a year conversion facility in South Korea by the end of this year.
The proposed facility will be expanded from 30,000 tonnes to 40,000 tonnes of lithium carbonate equivalent (LCE) a year and be supported by POSCO’s leading purification technology PosLX.
Their offtake agreement will increase from the originally proposed 240,000 tonnes to 315,000 tonnes a year over the lesser of 20 years and the life of the Pilgangoora project.
Under the revised offtake terms, the joint venture (JV) will provide Pilbara Minerals with a $US25 million prepayment, which will be used to partly fund the Pilgangoora project’s stage two expansion.
“This joint venture will give Pilbara Minerals significant exposure to one of the world’s most dynamic and fastest growing markets for lithium chemicals, among Tier 1 South Korean battery manufacturers,” Pilbara Minerals managing director Ken Brinsden said.
“Supply to the proposed South Korean chemical plant will also have the benefit of further diversifying our spodumene concentrate sales arrangements over time.”
The development of the conversion facility runs in tandem with Pilbara Minerals’ stage two expansion of Pilgangoora.
Pilbara Minerals has also completed technical studies that support Pilgangoora’s expansion to a total of five million tonnes a year over time. The first phase of the development is expected to deliver an additional 100,000 tonnes a year of spodumene concentrate capacity.
The company expects to complete a feasibility study for the revised stage two expansion by December.
Pilbara Minerals, however, didn’t find a suitable partner or proposal for the expansion project.
“Pilbara Minerals does not not believe the proposals received to date represent an appropriate valuation for substantial ownership of one of Australia’s premier, long-life lithium projects, particularly in light of current market conditions,” the company stated in an ASX statement.
It anticipates the commissioning of the Pilgangoora stage two expansion to take place during the December quarter 2020, with first concentrates to be delivered to the POSCO JV thereafter.
POSCO, to date, is operating both a pilot scale and 2500 tonnes a year demonstration plant using its PosLX conversion technology to manufacture “a very high-grade” lithium hydroxide.
This operation has reportedly demonstrated a viable pathway to establish large-scale lithium chemical conversion and purification facilities.
The JV expects the construction of the proposed large-scale facility to commence from the December quarter of this year and reach completion in April 2021.
The formation of the JV, however, is subject to completing and approving an initial business plan and budget, board approvals and execution of definitive agreements in the December quarter.
Pilbara Minerals’ initial 21 per cent stake in the JV will be largely funded through a $79.6 million convertible bond agreement being provided by POSCO Australia.