Australian lithium-tantalum producer, Pilbara Minerals Limited (ASX: PLS) has announced that its Board has conditionally exercised its option to enter into an incorporated downstream joint venture (DJV) with POSCO to develop a 40ktpa LCE (lithium carbonate equivalent) capacity downstream chemical conversion facility in South Korea.
Lithium chemicals consumption in South Korea is growing rapidly. Therefore, it is expected that this partnership of Pilbara with POSCO will allow it to be at the forefront of this emerging market. As per Benchmark Minerals Intelligence (October 2018), it is expected that the Korean battery manufacturers will supply around 25% of worldwide capacity by 2028.
The progression of this downstream joint venture will allow Pilbara Minerals to further diversify the Pilgangoora Project’s customer base. This joint venture will provide access to POSCO’s patented PosLX processing technology, which delivers industry-leading battery- ready lithium hydroxide and lithium carbonate products, with very low impurities.
The partnership with POSCO provides Pilbara with an opportunity to enter the battery grade and cathode material product supply market and become a fully vertically integrated global lithium raw materials company.
While commenting on the relationship with POSCO, Pilbara Minerals’ Managing Director and CEO, Ken Brinsden said that the management of the company is proud of the relationship that it has developed with POSCO over the last year, which has gone from strength to strength.
He further told that it has been really pleasing to see the positive results generated by the due diligence work to date. The significant investment by POSCO into their PosLX technology has paid off and they have proven their ability to produce an industry leading, battery-ready lithium product through their innovative lithium purification process.
Since the fourth quarter of 2018, the company is undertaking technical due diligence to assess the proposed chemical plant development. Due diligence has included a visit of technical staff and assessment of POSCO’s existing commercial operations plant using their PosLX technology, based on Pilbara Minerals’ spodumene delivered from the Pilgangoora Project.
Although the company has made a final investment decision regarding its full participation in the DJV, there are still several outstanding conditions that need to be satisfied. The company still needs to complete a further due diligence on the proposed chemical conversion plant, financing, and finalisation of the final binding joint venture and technology licensing terms consistent with key commercial principles previously agreed between the parties.
The parties are planning to complete the construction of the chemical conversion plant in late 2020 with the commencement of ramp up and production from early 2021.
Meanwhile, in the last six months, the share price of the company decreased by 9.49% as on 15 March 2019. PLS’s shares are trading at $0.720 with a market capitalization of circa $1.25 billion as on 18 March 2019 (AEST 2:42 PM). It has 52 weeks high of $1.125 and 52 weeks low of $0.570 with an average volume of ~6,901,603.
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