Pilbara Minerals has shored up plans for the expansion of its Pilgangoora lithium project by signing an offtake and downstream processing deal with South Korean steel giant POSCO. Shares in the company surged more than 10 per cent this morning after Pilbara emerged from a trading halt to announce an offtake agreement with POSCO initially worth 80,000 tonnes a year of spodumene from the Pilgangoora Stage 2 (5Mtpa) project, increasing to 240,000tpa on Pilbara’s participation in a downstream processing joint venture. Under the terms of the deal, POSCO will invest $79.6 million in Pilbara by way of a placement priced at 97¢ for a 4.75 per cent stake in the company. Under the joint venture deal, Pilbara will take a 30 per cent stake in a plant capable of producing 30,000tpa of either lithium carbonate or lithium hydroxide in Korea. POSCO will invest a further $97.6 million in Pilbara by way of a convertible note issue should the joint venture deal go ahead. Pilbara said the deal diversified its sales agreements outside of China with 30 per cent of its entire proposed production from Stage 1 and 2 to be sold in the South Korean market. Pilbara managing director Ken Brinsden said the agreement provided the basis to effectively transform the company into a vertically integrated producer of lithium-ion battery materials — helping to achieve one of its key longer-term growth objectives of capturing higher value for its product. Mr Brinsden said the pace of expansion of the lithium-ion battery sector in Asia was probably not fully appreciated by Western analysts. “POSCO’s further investment by way of an unsecured convertible bond, which is linked to our future decision to participate in the downstream joint venture, will fund a large majority of our joint venture commitments as the joint venture moves towards 30,000tpa of lithium carbonate and lithium hydroxide production capacity,” he said. Pilbara plans to begin producing about 300,000t of lithium concentrate in the second half of this year, eventually reaching as much as 800,000t annually. The news comes a day after Morgan Stanley predicted a 45 per cent fall in lithium prices by 2021 because planned expansions by the big producers in Chile “threaten to add” about 500,000t of lithium supply by 2025. It said battery electric cars would have to comprise 31 per cent of sales by 2025 to clear the market. Pilbara shares were up 11.2¢, or 13.49 per cent, to 94.2¢ at 9.30am.
Pilbara Minerals can expand its Pilgangoora lithium scheme in Western Australia after signing a AUD79.6m ($62.1m) deal with South Korea's POSCO. Pilbara has announced an off-take deal initially worth 80,000 tonnes a year (tpa) of spodumene from Pilgangoora Stage 2 (5 Mtpa), rising to 240,000 tpa on the company's participation in a downstream processing joint venture. The company said it would also invest AU$200m into developing new projects including a mine at Mount Gambier, near Kalgoorlie, and another project at Port Hedland that will produce up to 200,000 t@@