Perth mining company Pilbara Minerals says it has received $US75 million in funding from two key Chinese customers to help expand its lithium ore project in Western Australia.
The funding will be used to expand its Pilgangoora lithium ore mine 120km from Port Hedland to producing five metric tons per year, from two metric tons, Pilbara said on Thursday.
The expansion, to be completed by March 2020, puts the company ‘firmly on track to become one of the world’s major global lithium raw material producers,’ Pilbara Minerals managing director and CEO Ken Brinsden said.
‘The quality of the products we are producing, the sheer scale of the resource and the speed at which production is ramping up means that Pilgangoora is rapidly being recognised as one of the most important new lithium raw materials projects globally.’
Pilbara said it had received funding commitments of $US25 million from Great Wall Motor Company and $US50 million from Jiangxi Ganfeng Lithium Co.
That money, as well as a proposed $US50 million Nordic bond and existing cash, will be used to fund the $A231 million expansion of the Pilgangoora mine, which first began producing spodumene concentrate in October.
Acid is used to extract lithium from the spodumene for use in batteries, ceramics and medicine.
‘Our key customers have recently visited site and they clearly like what they have seen,’ Brinsden said.
They are interested in expanding the mine further, so it can produce 7.5 metric tons of spodumene per year.
About 200 people work at the mine, with about 800 working there during its construction.
Brinsden told AAP that the expansion showed the extent to which the market was integrating supply chains in the face of strong demand.
‘It belies the state of lithium equities which is kind of nervous and downtrodden,’ he said.
Lithium prices fell last year after a significant rise in years previous.
Brinsden said he expected demand to increase from the likes as Tesla as the world moves quickly towards electric vehicles and away from the internal combustion engine.
The mine also produces tantalum, a metal element that is used in capacitors for consumer electronics.
With production at Pilgangoora ramping up, Pilbara also said on Thursday it was evaluating expanding its planned spodumene processing plant in South Korea, which is jointly owned with South Korean steel-making company POSCO.
Pilbara shares were trading 16.8 per cent higher at 1230 AEDT, to 73 cents.