The Pilbara Minerals Ltd (ASX: PLS) share price is up after the business announcing a final investment decision (FID).
Pilbara Minerals is one of the largest ASX lithium miners on the ASX.
Final investment decision on mid-stream demonstration plant
The Pilbara Minerals board has granted approval for the construction of the demonstration plant to produce value-added lithium product at the Pilgangoora project.
The idea of the project is to demonstrate “the potential to improve the battery materials supply chain through the decarbonisation of raw lithium (spodumene) processing, reduction in transport volumes and increased value-add processing at the mine site.”
This project is going to be a joint venture between Pilbara Minerals and Calix Ltd (ASX: CXL).
It’s going to use Calix’s patented electric kiln technology which “has the potential to reduce hard-rock lithium processing carbon emission intensity if powered by renewable energy.”
Independent life cycle assessment studies estimate that converting spodumene using electric calcination when using 100% renewable energy has the potential to reduce carbon emissions by at least 80%, which would “materially reduce” carbon emissions in one of the most energy-intensive steps of the lithium battery materials production process.
How much is this going to cost?
Pilbara Minerals said that the estimated construction cost of $104.9 million will be partially funded with a $20 million Australian government grant, with Pilbara Minerals now funding $67.4 million of the remaining budgeted construction expenditure.
The ASX lithium share is the manager of the joint venture and will manage both the construction and operational phases of the project.
It’s aiming to start producing in 2025, with a ramp up to steady state production in the March 2026 quarter.
What next?
Pilbara Minerals said that if the demonstration plant is successful, it may lead to commercialisation of the technology. The ASX lithium share has the right to a licence to use the electric calcination technology for use in its own mid-stream or downstream commercial scale plants potentially developed either at Pilgangoora or in other locations including in joint venture with third parties.
Final thoughts on the Pilbara Minerals share price
The more that Pilbara Minerals can be involved in the lithium supply chain the better, as it will be able to take home more of the profit margin, which would be a good thing. Is today a good price to invest? It’s really hard to say, it depends on what the lithium price does. If the company keeps expanding, I think it could prove to be cheap.
