The Pilbara Minerals Ltd (ASX: PLS) share price is up 3.75% after announcing a lithium deal.
Pilbara Minerals is an ASX lithium share with major operations in Australia.
Lithium agreement with Yahua
The ASX lithium share has agreed a new (offtake) agreement with Sichuan Yahua Industrial Group to supply spodumene concentrate (which is raw lithium).
Yahua is a large lithium chemicals company, one of the largest lithium hydroxide producers in the world. Yahua has customers like Tesla, LG Energy Solutions, LG Chem and Contemporary Amperex Technology.
In the 2024 calendar year, Pilbara Minerals has agreed to supply 20kt of spodumene concentrate, with an option to supply an additional 60kt (which is up to Pilbara Minerals to decide).
In the 2025 calendar year, the ASX lithium share has agreed to supply 100kt of spodumene concentrate, with an option to supply an additional 60kt.
In the 2026 calendar year, Pilbara Minerals has agreed to supply 100kt of spodumene concentrate, with an option to supply an additional 60kt.
All of these volumes will be sold based on the market price at the time.
This supply is separate to the strategic partnership process which continues to be progressed in parallel.
Management commentary
The Pilbara Minerals’ Managing Director and CEO, Dale Henderson, said:
We are delighted to have signed this offtake agreement with Yahua, a leading global lithium chemicals producer which has extensive supply chain relationships with major battery materials customers globally.
This offtake builds-on an established relationship between our companies, having previously completed a number of sales together. The agreement enables Yahua to further expand its supply chain commitments with key global battery customers and builds-out Pilbara Minerals medium-term sales profile whilst preserving long-term optionality as we assess downstream opportunities in-line with our growth strategy.
We are pleased to formalise this key relationship and support our shared objective to grow our respective positions in the lithium battery materials supply chain.
Final thoughts on the Pilbara Minerals share price
There is growing excitement about the lithium sector, with demand in China looking positive. If the lithium price can keep recovering, that would spell good news for profit, cashflow and possibly dividends.
Is the company a buy? At this price it really depends on what lithium prices do, which is impossible to know. There are other ASX growth shares I’d rather buy today.
