Pilbara’s Share Price Rises on POSCO Lithium Update

After opting to enter into an incorporated downstream joint venture (DJV) with POSCO [NYSE:PKX], Pilbara Minerals Ltd [ASX:PLS] shares are edging higher.

At the time of writing, Pilbara’s share price is trading at 72 cents, up 0.70%.

Related: Could lithium be Australia’s next resource boom? Find out more here for free.

Pilbara moves closer to participation in lithium chemicals market

The DJV with POSCO is working to develop a 40ktpa lithium carbonate equivalent (LCE) downstream chemical conversion facility, located in South Korea.

Pilbara will have access to POSCO’s patented PosLX processing technology, giving Pilbara battery-ready lithium hydroxide, as well as lithium carbonate products with minimal levels of impurities.

Commercial scale was determined at POSCO’s existing conversion plant (in Gwangyang), using Pilgangoora Project’s spodumene.

The DJV is still waiting on due diligence, as well as final board approvals from both companies on whether to further develop and execute final DJV terms.

Pilbara’s managing Director and CEO, Ken Brinsden, commented on POSCO’s PosLX processing technology:

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.

For Pilbara Minerals to have secured a strong and technically capable partner like POSCO is no mean feat and gives us an exciting opportunity to partner with them to enter the battery grade and cathode material product supply market and become a fully vertically integrated global lithium raw minerals company.

Since undertaking due diligence, results in the proposed chemical plant development are looking promising.

Pilbara’s battery-grade lithium hydroxide product has been tested by major South Korean cathode makers, passing their qualification process.

Lithium consumption growth impacting Pilbara’s share price

As the world’s lithium appetite continues to grow, Pilbara stands to benefit. However, Pilbara Minerals’ board is still making its final investment choices, in regard to its full participation in the DJV.

They are likely considering outstanding conditions such as the competition of due diligence, financing and finalising technology licensing terms.

Investors may want to wait these out, as they could explain why today’s rise in share price wasn’t as big as some were initially expecting.

But Brinsden did give shareholders something to look forward to:

The rapid growth in lithium chemicals consumption in South Korea cannot be underestimated and we believe this partnership positions Pilbara minerals at the forefront of this emerging market, which is forecast by Benchmark Minerals Intelligence (October 2018) to position Korean battery manufacturers to supply around 25% of worldwide capacity by 2028.


Ryan Clarkson-Ledward,
For Money Morning

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Ryan Clarkson-Ledward is an Editor at Money Morning.

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