Pilbara Minerals is taking a wary approach to its plan for stage two and three expansion projects at the Pilgangoora lithium-tantalum project in Western Australia.
The company has proposed to expand Pilgangoora’s capacity to five million tonnes a year with the stage two expansion, before growing to 7.5 million tonnes a year through stage three.
“(But) given the current market conditions, we have taken the prudent approach to staging our expansion program and have committed to only expanding as and when required by our customer base or when demand supports it,” Pilbara Minerals chairman Ken Brinsden said.
Pricewaterhouse Coopers (PwC) this week reinforced the difficult market conditions lithium miners have been facing, stating that prices have “come right down” as global supply exceeded demand.
PwC’s latest report on the mid-tier mining sector revealed that market capitalisations for half of the largest Australian companies in this bracket have dipped this year, with many of the culprits being lithium-focussed miners.
In response to the challenging conditions, Pilbara Minerals has launched a moderation strategy at Pilgangoora, aligning the mine output with the demand of offtake customers. This has resulted in improved product recoveries and lower operating costs.
Pilbara Minerals expects to continue with a moderation strategy throughout the December quarter.
Brinsden, speaking at the company’s 2019 annual general meeting, credited the entire Pilbara Minerals team for its dedication and focus on the work at Pilgangoora.
“The past year has not been without its headwinds and challenges, particularly in the period since early June,” Brinsden said.
“Market conditions have been volatile, with Chinese domestic pricing for lithium chemicals – and by extension, the spodumene concentrate that we produce – declining in response to changes in the local subsidy regime.”
Brinsden, however, retains a positive outlook in the medium and long-term for Pilbara Minerals’ spodumene concentrate product.
He said hard-rock lithium was a point of market differentiation in Australia, and would continue to be as the responsible sourcing of products became a bigger focus area in the coming years.
“While the 2019 financial year has presented challenges, the company has addressed these with great care and discipline,” Brinsden said.
“It has not been easy for management and employees, particularly those on site, and it is highly appropriate at this annual general meeting to acknowledge the work and dedication of our management and employees.”