Pilbara Minerals expands offtake deal with Ganfeng

Australian lithium producer Pilbara Minerals (ASX: PLS) has increased its sales contract with Ganfeng over the next three years and has the option to further boost the spodumene concentrate tonnage sold to the major Chinese lithium firm.

The updated agreement, originally inked in 2017, spans the period from 2024 to 2026, with a total allocation of up to 310,000 tonnes per annum from the company’s flagship Pilgangoora operation in Western Australia. Under the initial agreement from 2017, Pilbara has supplied 160,000 tonnes  per year of spodumene. 

“We are delighted to be expanding our valued relationship with Ganfeng, who has extensive capability in the production of battery grade lithium products with over 20 years of industry experience and rapidly expanding global footprint as a major global supplier,” managing director and chief financial officer Dale Henderson said in the statement.

All concentrate sold will be based on the prevailing market price, Pilbara said. It noted the increased supply to Ganfeng is separate to the company’s strategic partnership process, which continues to progress in parallel and is expected to conclude in the March quarter 2024.

The tie-up seeks to explore joint opportunities in downstream lithium conversion, Pilbara said.

The company, Australia’s largest independent lithium miner, has been investigating how it can add value to its hard rock spodumene ore as it aims to grow its business. As part of this plan, it is building a demonstration plant to process lithium from Pilgangoora.  

The technology, if powered by renewable energy, could cut carbon emissions by more than 80% in one of the most energy-intensive steps of the lithium battery materials production process.

The plant is expected to allow Pilbara Minerals to produce 1 million tonnes of spodumene concentrate next year.

Pilbara shares were down 8.25% to A$3.56 apiece on Monday, valuing the company at A$10.7 billion. Its shares traded in a 52-week range of A$3.10 and A$5.43.