Pilbara Minerals has announced that it has signed a binding term sheet with a subsidiary of Ganfeng Lithium Group to complete a joint feasibility study on an approximately 32,000t per annum downstream lithium conversion plant.

The feasibility study will consider location, fiscal incentives, flowsheet, sustainability and economics. 

Pilbara Minerals said the location evaluation will focus on emerging battery materials hubs with an aim to diversify respective businesses geographically and ensure emerging markets for lithium demand are efficiently served.

It is expected to be completed in the March quarter 2025 with an option to progress to a final investment decision and formation of a joint venture (JV) following that.

The agreement was made on a range of principles which the parties intend to give effect to if the JV proceeds, including 50:50 JV ownership, offtake of 300ktpa of spodumene concentrate supplied by Pilbara Minerals and willingness to explore IRA benefits via project equity sell-down if required.

Costs are limited to the feasibility study and no capital investment is expected on the JV until FY26 and then only if a final investment decision is approved.

Pilbara Minerals said the feasibility study represents a key milestone in the company’s downstream strategy, creating further potential to:

  • Extract a greater proportion of value across the battery materials supply chain
  • Benefit from the increase in public and private investment planned to develop geographically diversified battery chemicals processing capability
  • Further strengthen a customer relationship, while supporting Pilbara Minerals’ core upstream business through a concomitant offtake agreement

The feasibility study will also assess production of a potential intermediate lithium chemicals product in Australia to reduce transportation volumes and carbon footprint.

Pilbara Minerals’ Managing Director and CEO, Dale Henderson, said, “We are delighted to have selected our long-standing customer, Ganfeng, to join us in taking the next step towards a major downstream facility for lithium battery chemicals production. 

“This incremental move supports our strategic aim to capture greater value through the supply chain and realise the benefits of supply chain integration.

“Ganfeng is a leader and major supplier of lithium chemicals globally. Over the course of its 24-year history, Ganfeng has grown extensive global supply chain relationships with many of the major operators in this emerging battery materials industry. 

“Ganfeng has also distinguished itself for its strong R&D capability and operating performance, especially for producing low-cost and high-quality lithium chemicals. These attributes, in combination with our strong alignment to maximise shareholder returns, provide a great match to extend our established relationship together.”

Mr Henderson said the feasibility study provides an important first step, enabling the two companies to combine their efforts in exploring a preferred location and optimal flowsheet for a downstream lithium chemicals facility which will maximise project economics whilst meeting agreed sustainability standards. 

“This study-first approach provides Pilbara Minerals with the option, but not the obligation, to proceed with a lithium chemicals joint venture. This is a prudent approach to ensure Pilbara Minerals only proceeds with a joint venture if the investment case is sufficiently compelling.”

Ganfeng’s President and Vice Chairman, Wang Xiaoshen, said, “We are very pleased to be growing our relationship further with Pilbara Minerals, a trusted partner which has proved to be a reliable and capable supplier of lithium concentrate over the last six years. 

“Further, the two companies share strong alignment in our growth ambitions and we have considerable strengths we can leverage through working together.

“This feasibility study marks an important step as we jointly pursue the best growth opportunities. We look forward to working with Pilbara Minerals to leverage our expertise in lithium chemical conversion to develop the investment case for a globally competitive lithium chemicals joint venture to service leading customers in the lithium-ion supply chain.”

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