Pilbara Minerals (ASX:PLS), the country’s largest independent lithium producer, reckons around $1.2 billion will double its lithium spodumene production capacity at its Pilgangoora mining operation in the Pilbara.
It’s an ambitious plan that, if given the green light, would see Pilbara maintain its major position in the growing global lithium trade well into the 2030s.
In a statement to the ASX, Pilbara said it would move to a final feasibility study by the end of next year on the plan. Currently, it is considering building spodumene production capacity to nearly 2 million tonnes per year over a 10-year period starting later this decade.
Production will average 1.9 million tonnes per year, building to 2 million tonnes per year six years after the plant comes on stream.
Given the way lithium is viewed by most miners, Pilbara’s plans were ignored, and the shares were sold down by nearly 3% on Friday. That left them down more than 21% for the year so far. Lithium remains unpopular.
The expansion would see Pilbara Minerals build a new flotation plant for extracting lithium from the spodumene adjacent to the existing flotation plant to constrain costs. A new five-million-tonne-per-year concentrator would be needed.
The company says its plans to expand production can be met from existing reserves of 214 million tonnes of spodumene (upgraded in mid-2023), so all the capex needs to be spent on the new flotation plant, additional mining equipment, and associated facilities at the existing mine, which will reach nameplate capacity of 1 million tonnes per year by the September quarter of 2025.
Based on current production and the expansion plan, the life of the mine would fall from 34 years to 23 years, based on existing reserves. The extra output and mining plan would be useful in helping the company handle the additional waste material that would need to be mined.
This plan is different from 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.
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. If viable, it will significantly boost Pilbara’s plans to move up the lithium value chain.
CEO Dale Henderson said in the statement (and told investors at a briefing), "This expansion is expected to provide an average 1.9Mtpa production for the first 10 years and more than 2Mtpa over the first six years after ramp-up. The scale benefits of this expansion will further build on Pilbara Minerals’ position as one of the major leading lithium suppliers globally.
“The next level of feasibility study will now commence with expected completion in the December Quarter CY25. As we have done in the past, the timing of the FID will be considered in conjunction with prevailing market conditions and will only proceed when it makes sense to do so.
"In parallel to the feasibility study, the company will consider the full suite of opportunities associated with this expansion, including funding, offtake strategy, and downstream partnerships,” Henderson said.
Pilbara earlier this year agreed to a study with China's Ganfeng Lithium on options to build a 32,000-tonnes-per-year lithium conversion facility. Ganfeng is one of Pilbara’s major buyers of spodumene.
