Pilbara focused on organic growth

Pilbara produces 580,000tpa of 5.7% spodumene concentrate from its Pilgangoora mine in Western Australia, with a two-phase expansion to take that to 680,000tpa and then 1Mtpa, potentially more."We have a phased expansion strategy that is approved and into construction. Meanwhile, we are drilling and doing studies to inform if we can take a further step up. I'm optimistic it's possible because the drilling is going well, we are not spatially constrained, we are not capital constrained, and so it feels like the ingredients are coming together for this to occur. It's all about building more processing capacity and sizing that appropriately," said Henderson.HydroxideIn 2021, Pilbara signed a joint venture agreement with Posco to build a 43,000tpa lithium hydroxide facility in Gwangyang, South Korea with a US$750 million development cost. Pilbara will hold an 18% interest and supply 315,000tpa of chemical-grade spodumene concentrate to the plant. Lithium hydroxide is a higher quality product that commands a higher price than lithium carbonate. The partners secured a US$460 million debt facility with Korean government-owned banks in February, the balance of the total funding requirement. Construction is underway, with the commissioning of the first 21,500tpa train scheduled for late 2023.Joe Lowry, president of Global Lithium and known as Mr Lithium, said earlier in the conference that he believes too many companies are rushing to build lithium hydroxide production capacity as he believes the lithium-ion battery market, with the growth of LFP (lithium-ion phosphate) batteries, looks like it will require more carbonate rather than hydroxide. While accepting Lowry's thesis, Henderson said hydroxide was the right move. "We are trying to understand what the world is going to prefer as it relates to battery technology, and then solving for that feedstock, whether it's carbonate, hydroxide or even lithium metal. The jury is out on that. We can be fairly certain there will be a home for the high-density battery subset, which is hydroxide driven. The technical barriers to entry are much higher than carbonate. Participating in the high-end hydroxide and manufacturing at the right cost base, I think there'll be a premium to be paid for that," said Henderson.CO2 emissionsThe company's growth and development strategy includes responding to the increasing scrutiny of CO2 emissions. Lithium from Australian spodumene sources generally has a higher carbon footprint than Latin American brines production because the power grid Chinese converters are connected to is coal-fired.To address this, its midstream project in the USA aims to use Calix's patented calcination technology to produce a highly concentrated lithia product, reducing its carbon energy intensity and the volumes of shipped waste currently present in spodumene concentrate."There is an evolution around deploying lower carbon methods to produce more sustainable products. We are looking at a demonstration project deploying a calcination solution for chemical processing to give us more value-add. If it works out well, we're looking to commercialise it for our users and bring it into the industry. It needs to earn its stripes," said Henderson.Pilbara is also looking at potential supply chain investments elsewhere where it could benefit from the 2022 Inflation Reduction Act, given that Australia enjoys a free trade agreement with the USA."There is a geopolitical overlay and we envisage there will be benefits to flow through IRA support. We have an eye on Europe and other regions. The South Korea investments have been good because there are existing battery cathode makers, with synergies and quality control pieces we think are advantages," said Henderson.ConsolidationWith Allkem and Livent undertaking a US$10.6 billion merger, Henderson said he believes the industry consolidation trend would continue, although Pilbara is unlikely to be involved in a transaction soon."Consolidation is highly likely, and we're seeing evidence of that already. It's not a case of having capital, we need capital, but you also need expertise, and few groups have that. Everyone has a target on their back, but how big is the buyer pool, and who are they? There are very few entities with the capital and appetite for us," said Henderson."We are in organic growth so we are setting ourselves up to understand options and if the right thing comes along, we want to be positioned to do the right deal, but it has to be the right deal. We are not in any hurry to grow inorganically. Making sure we deliver well on the core business is front of mind for us."

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