Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
Pilbara Minerals, Australia’s biggest independent lithium producer, on Friday laid out a A$1.2 billion ($799.2 million) plan to double production capacity for lithium spodumene at its Pilgangoora operation in Western Australia.
More spodumene from the miner’s flagship operations could result in a decade of output averaging 1.9 million tonnes per year if it decides to press go on the project, following a feasibility study expected to be completed in late 2025.
The expansion would require Pilbara Minerals to build a new flotation plant for extracting lithium from the spodumene that would be adjacent to an existing flotation plant to constrain costs. The plan is being laid out as Pilbara keeps its options open for future production amid low prices for the battery material.
“We expect the full suite of funding options to be available for us, which could include cash flow from our operations, and government support. We could look at offtake and finance as well as debt and equity,” CEO Dale Henderson told Reuters.
Pilbara had A$1.8 billion in cash on its books as of March 31, 2024.
The output plan is separate to Pilbara’s study to process its spodumene into a more lithium-rich product that could be sold at higher margins, for which it is building a demonstration plant with Calix Ltd, he said.
The demonstration plant will trial electric calciner technology to make a lithium phosphate product containing 18% lithium, up from 5% to 6% contained lithium in spodumene.
The trial may yield learnings that could apply to other projects around the world, and offer Pilbara another revenue stream through licensing, Henderson said.
Pilbara earlier this year agreed to a study with China’s Ganfeng Lithium on options to build a 32,000 metric-ton-per-year lithium conversion facility.
The site for the plant has not been decided but a number of countries are being considered, including Australia.
Pilbara’s shares fell 3.8% to A$3.08, amid weakness in lithium miners, while the broader mining sub-index dropped 0.3%.
($1 = 1.5015 Australian dollars)
(By Sherin Sunny; Editing by Subhranshu Sahu, Sherry Jacob-Phillips and Christian Schmollinger)
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