Lithium miner welcomes free-hit funding from South Korea

Two South Korea government-owned banks will fund a lithium hydroxide plant being built by Pilbara Minerals and POSCO in Gwangyang to the tune of $US460 million ($685.4 million).

The Gwangyang plant will convert about 315,000 tonnes a year of spodumene from Pilbara Minerals’ Pilgangoora mine in WA into 46,000 tonnes a year of high-value hydroxide once fully operational.

The loan comes with no recourse to Pilbara Minerals, with the security provided by a joint venture company it formed with POSCO and limited to the land, building, plant and equipment of the hydroxide plant.

The funding arrangement was unveiled just days after another of WA’s big lithium producers, Mineral Resources, warned the federal government needed to do a lot more to help if Australia was to compete against the rest of the world in downstream processing of battery minerals.

The backing from Korean banks completes the remaining 60 per cent of the funding puzzle for Pilbara Minerals, which has already contributed its 18 per cent share of equity funding via a near $80 million convertible bond agreement with POSCO.

Construction of the hydroxide plant has started with commissioning of the first 21,500-tonne-a-year train expected from late in calendar 2023 and the second train in the first half of 2024.

Pilbara Minerals managing director Dale Henderson said the company was delighted its joint venture with POSCO had secured this debt funding on commercially favourable terms.

“Building on our strong relationship with POSCO, we are delighted to be jointly establishing a strong foothold in South Korea’s emerging battery materials industry at the doorstep of established major battery manufacturers,” he said.

Pilbara Minerals, which last Friday declared its maiden dividend after recording a first half net profit of $1.24 billion, has an option to increase its equity stake in the hydroxide joint venture to 30 per cent as it moves downstream in battery chemicals.

In Australia, Pilbara Minerals in partnership with Calix is looking at producing a value-added lithium product, with higher concentration and fewer impurities, at Pilgangoora and has received a $20 million modern manufacturing initiative grant from the federal government to build a demonstration plant.

Mineral Resources last week agreed to a near $1 billion investment in downstream lithium processing assets in China, but hasn’t given up hope of building a hydroxide plant onshore if the federal government offers more support.

MinRes boss Chris Ellison wants faster approvals, instant tax write-offs and low-cost, long-term loans to promote downstream processing in battery minerals.