Lithium producer Pilbara Minerals has instructed Macquarie Capital to begin a global search for its new partner to build a $1 billion processing plant, with the goal of converting spodumene to battery-ready lithium hydroxide.
Pilbara Minerals boss Dale Henderson.
It is understood bankers at Macquarie fired the starters’ gun on the mooted process past week and would comb through lithium processing majors across North America, Asia and Europe.
The JV partner search is expected to be run as a traditional two-part process, but with a greater emphasis on mutual benefits for the two sides. Sources said Pilbara would take indicative proposals and shortlist potential parties in the months ahead, but there wasn’t a firm timetable yet.
Pilbara, which is capitalised at $15 billion on the ASX, already has a lithium processing joint venture with Korean metals giant POSCO. The duo is building a 43,000 tonnes plant in South Korea’s Gwangyang, which Pilbara has said would be the sixth-largest lithium hydroxide producer in the world outside China at 2026 nameplate capacity.
The $US800 million ($1.2 billion) plant would process Australian ore in Korea.
Better than last time
Despite the Korean processing plant, Pilbara’s expected to have about 300,000 tonnes a year of extra spodumene as it ramps up production, that it wants to put through the new venture. While the POSCO joint venture left Pilbara with an 18 per cent to 30 per cent stake, this time around it is expected to push harder to tip the scales in its favour.
Mining sources said Pilbara negotiated the POSCO joint venture from a position of weakness, but now it’s the one holding the cards with surplus spodumene supply. As a result, Pilbara and Macquarie would likely start discussions at an equitable 50-50 joint venture, with the needle moving in favour of its partner should they happen to be a rock star lithium processor. Globally, Albemarle and SQM play in the segment.
The choice of location would be driven heavily by government subsidies. The Inflation Reduction Act in the United States has made it a key stop on the search party’s list, sources said.
It was a similar story for the POSCO-Pilbara joint venture, where South Korean government agencies loaned the duo $US460 million in May to mop up funding; the plant is expected to be built 40 per cent cheaper than Australia. Sources said Pilbara would also try to look at structures to minimise its half of the development cheque to virtually zero.
Pilbara Minerals’ Pilgangoora asset in Western Australia is a globally significant hard-rock deposit. It has grown production by 250 per cent since 2019 to build a $2.7 billion cash balance. It is now looking to increase spodumene concentrate production by 70 per cent over the coming two years, in what is partly driving its push for the new processing venture.
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June 22, 2023 at 04:38PM
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