Chinese market conditions in the spodumene industry are set to moderate Pilbara Minerals’ production at the Pilgangoora project in Western Australia in the coming months.
Pilbara Minerals expects slower demand driven by delays in the construction, commissioning and ramp up of chemical conversion facilities that both its offtake customers General Lithium and Ganfeng are experiencing.
The delays have resulted in lower shipped tonnes of 43,214 dry metric tonnes from the Pilgangoora operation during the June quarter.
“Key customers have continued to progress the build-out and commissioning of their chemical conversion facilities in China, albeit at a slower rate than expected,” Pilbara Minerals managing director Ken Brinsden said.
“These investments represent a pivotal chapter of development in the lithium supply chain and are aimed at enabling them to capitalise on the strong forecast demand for battery-grade lithium chemicals, which in turn drives their demand for our product.”
Brinsden, however, remains confident in the company’s longer-term outlook, which will see Pilbara Minerals deliver China’s Great Wall Motor Company with an additional 20,000 dry metric tonnes a year for six years.
Pilbara Minerals has signed an expanded offtake agreement with Great Wall Motor, with first shipment scheduled in August.
The company also continued to make “modest” sales to South Korean-based POSCO in support of the existing pilot plant, with 2993 dry metric tonnes shipped in the last quarter.
Pilbara Minerals is on track to establish a downstream chemical conversion facility in joint venture (JV) with POSCO, with a final investment decision and approvals from both boards anticipated in the September quarter.
“From an operational perspective, the June quarter saw further consolidation in the growth of spodumene concentrate production at Pilgangoora with high plant utilisation, excellent throughput and strong product grade shipped to customers,” Brinsden said.
The continued ramp up at Pilgangoora has delivered a quarter-on-quarter rise in spodumene concentrate production, amounting to 63,782 dry metric tonnes during the June quarter.
Pilbara Minerals expects the improvements to progressively reduce the company’s operating costs over the course of the 2020 financial year, as it works to reach nameplate capacity at the Pilgangoora mine.