The Pilbara Minerals Ltd (ASX: PLS) share price is currently up more than 3% at the time of writing. What’s going on?
Lithium joint venture
Today, Pilbara announced that it has finalised its joint venture with POSCO to participate in a downstream lithium chemicals facility.
This agreement means that development can go ahead for a 43kt per year jointly owned lithium hydroxide conversion facility in South Korea, with commissioning expected from the September 2023 quarter.
The company said that this furthers the company’s goal of becoming a fully integrated lithium raw materials company and diversifies the company’s global customer base providing exposure to the rapidly growing South Korean lithium chemicals market.
Pilbara will initially hold an 18% interest in the joint venture, funded from the previously announced A$79.6 million convertible bond agreement with POSCO.
A call option has been granted to allow Pilbara Minerals to stage its investment to increase its interest to 30%, for a period of up to 18 months after the successful ramp up of the conversion facility.
There is also an amended offtake agreement to supply 315kt per year of spodumene concentrate (lithium) to the conversion facility at market pricing for the lesser of 20 years or the life of the Pilgangoora Project.
The joint venture will provide a US$25 million offtake pre-payment facility to Pilbara Minerals to fund general working capital and future expansions at the Pilgangoora Project.
The conversion plant will reportedly play an integral role in POSCO’s supply chain and business strategy as it becomes a major battery materials supplier to global markets.
Tesla (NASDAQ: TSLA) deal
Another factor that may be helping the Pilbara share price is the fact that rental car company Hertz has put in an order for 100,000 Model 3s over the next 14 months. Hertz will pay US$4.2 billion for the order. This will make up around a fifth of its rental fleet.
More electric vehicles on the road should mean an even higher demand for lithium.
