Pilbara Minerals mulls building lithium processing plant anywhere but ChinaElouise FowlerMar 25, 2024 – 6.13pm
CEO of Pilbara Minerals, Dale Henderson. Tony McDonoughnone
Mr Henderson said he chose to partner with Ganfeng because the Shenzhen-listed firm 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,” he said.
But since the size and nature of Chinese investment in projects eligible for grants under US President
Joe Biden’s flagship $US369 billion ($561.2 billion) clean energy policy remain unclear, the pair have agreed to a special clause that allows Ganfeng to cut the size of the proposed 50:50 joint venture.
“As it relates to the IRA specifically, the US government has provided some guidance as to what level of partnership they considered as acceptable, or not,” he said.
“But we will continue to closely look at which groups start to benefit from the IRA, and we have an agreement with Ganfeng such that we can augment the deal if it turns out to be an optimal outcome for the joint venture.”
The United States lobbed the blockbuster Inflation Reduction Act in 2022 to encourage investment away from China – and re-industrialise the rust belt of US – by awarding tax credits for projects linked to clean energy.
The European Union and other Western allied countries are competing to lure companies too, fearing China could weaponise its dominance over supply chains including battery grade lithium, a rapidly growing sector driven by electric vehicle demand and mass energy storage. China refines 73 per cent of lithium, 86 per cent of battery cathodes, and manufacturers 83 per cent of batteries, Pilbara told the market.
“While China is expected to maintain a significant role within the lithium supply chain moving forward, it is expected that there will be growing geographical diversification with new hubs emerging in key strategic regions,” Pilbara told the market.
“Given this evolving landscape for the lithium-ion supply chain, the feasibility study has been intentionally designed to explore the optimal, process technology, chemical end-product, and jurisdiction to ensure the economics are maximised and risks minimised for the future JV.”
Australia is yet to offer a comparable subsidy scheme to the US or EU to lure investment, but if the Commonwealth does, Mr Henderson said that would boost the case for an investment.
He said proximity to markets, access to labour, permitting, and taxes all play in the mix of the feasibility study. “The key test to apply here is: can Australia beat the others?” he said.
“Of course, Australia has some things going for it, but it also has some things going against it. If the gap can be made up with some government support, well, that may really tip the scales, but we don’t see any particularly strong government support at this point.”
Pilbara, which already has a downstream processing facility in Korea with Posco, told the market the feasibility study will be completed by March next year, with an option to progress to a final investment decision and formation of a 50-50 joint venture, which would include a 300,000 tonne offtake deal for spodumene concentrate from Pilbara’s Pilgangoora mine in West Australia.
(20min delay)