Pilbara Minerals locks in $80m deal with South Korea’s POSCO

Lithium developer Pilbara Minerals has formed a partnership with POSCO that will see the South Korean steelmaker buy up to 240,000 tonnes a year (t/y) of lithium concentrate from its Pilgangoora operation in the Pilbara of Western Australia.

POSCO will acquire a 4.75 per cent stake in Pilbara Minerals for $79.6 million to secure the deal. The two companies signed a binding agreement for POSCO to take an initial 80,000t/y of chemical grade spodumene concentrate from the Pilgangoora stage two project.

The offtake will increase to 240,000t/y dependent on Pilbara participating in a downstream 30,000t/y lithium carbonate-lithium hydroxide conversion plant joint venture in South Korea.

With stage one of the Pilgangoora project funded, Pilbara Minerals plans to use proceeds from POSCO’s investment to accelerate plans to move the stage two expansion into production as soon as possible.

The relationship also diversifies Pilbara Minerals’ customer base outside of the Chinese market, while also adding another tier one strategic partner to support the Perth-based company’s growth.

Pilbara Minerals managing director and chief executive Ken Brinsden said the multi-faceted agreement set the foundations for a strategic partnership which delivered a number of exciting outcomes for the company.

“The upfront $79.6 million investment by POSCO will further strengthen our balance sheet as we accelerate stage two and complete the stage one project this year and introduce a quality new cornerstone investor to our register,” Brinsden said.

“The binding offtake agreement further diversifies our spodumene concentrate sales portfolio and means that output from stage two will be directly linked to Pilbara’s participation in the Downstream JV.”

Brinsden said the deal also provided the basis to effectively transform Pilbara Minerals into a vertically integrated producer of lithium-ion battery materials, helping to achieve a key longer-term growth objective and to capture value across both the mining and downstream processing stages of the raw materials supply chain.

“We see POSCO as a strong and reliable long-term partner with whom we can proceed in joint venture in downstream processing to supply the rapidly growing North Asian markets — where the pace of expansion of the lithium-ion battery sector is probably not fully appreciated by Western analysts,” he said.

POSCO is expanding its capabilities as a producer of battery-grade products and cathode materials for the burgeoning battery materials market in Asia.

For POSCO, it represents the first direct investment by a South Korean manufacturer of lithium-ion battery materials into an upstream supplier of spodumene concentrate.

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