CEFC commits $20M to WA lithium project boosting supply chain for electric vehicles and energy storage

27 June 2017

A West Australian project aiming to produce lithium concentrate - a central component used in electric vehicles and battery storage - has secured a US$15 million (about AU$20 million) investment from the Clean Energy Finance Corporation (CEFC).

In its first investment in a WA mining project of this type, the CEFC was a cornerstone investor in a US$100 million senior secured bond issued by Pilgangoora Operations Pty Ltd, a wholly-owned subsidiary of ASX-listed Pilbara Minerals Limited. The bond will finance the development of the Pilgangoora lithium-tantalum project in Western Australia.

The Pilgangoora lithium mine is in the Pilbara region, about 120km south of Port Hedland. It will produce lithia raw materials (spodumene concentrate) that can be used to support a full range of lithium products for lithium ion batteries and energy storage solutions.

CEFC CEO Ian Learmonth said the CEFC investment was a prime example of how the CEFC could support the development of a strong clean energy supply chain to further enable Australia's transition to a low carbon economy.

"Lithium is an essential part of the clean energy transition, particularly as we develop enhanced battery storage technologies that will allow us to increase the use of renewable energy, both for large-scale and small-scale projects," Mr Learmonth said.

"Worldwide demand for lithium is growing, driven by the increasing uptake of electric vehicles that use lithium ion batteries, and by the growth in energy storage solutions requiring lithium supplies.

"The lithium concentrate supplies to be produced by this project will help build Australia's capacity to supply much needed resources for the clean energy technologies that are set to play a vital role in increasing the use of renewables in our future energy mix."

Pilbara Minerals Managing Director and CEO, Ken Brinsden, said: "We are delighted to welcome CEFC as a cornerstone investor in our funding package for the Pilgangoora Project, which is set to become one of the most important new sources of hard rock lithium supply to meet burgeoning global demand for lithia raw materials over the coming decades."

This is the first time the CEFC has participated in a US denominated bond issuance, reflecting its role in creating new sources of finance to support the clean energy market, and demonstrating the potential of various debt instruments to finance greenfield projects.

CEFC transaction lead Melanie Madders added: "Australia is well positioned to play a leading role in supporting the increasing demand for lithium batteries in the future. This project will enhance the delivery of secure and reliable lithia raw materials and bring about the transition to increased renewable energy use in Australia and globally.

"The CEFC is pleased to be supporting this exciting Pilgangoora project, which expands our finance commitments to mining sector projects and supply chain investments. Previous CEFC investments have sought to reduce emissions through clean energy activities such as the use of battery storage and generating power from waste coal mine gas." 

Mr Brinsden added: "Pilgangoora is a world-scale project which will help underpin the establishment of an important new export industry in the Pilbara region of Western Australia, delivering strategic metals which are an essential part of the supply chain for the global battery supply chain which is currently undergoing transformational growth.

"Construction of the mine is expected to generate around 300 jobs and we're expecting mine commissioning to commence towards the beginning of next year. Concentrate will be exported from Port Hedland, predominantly to China under existing off-take agreements for processing into lithium carbonate and lithium hydroxide for a wide range of lithium products."  

Pilgangoora has already secured two long term off-take agreements, with Ganfeng Lithium and General Lithium, for the majority of the mine's expected output of 2Mtpa per annum of processed ore.  Ganfeng Lithium is one of China's largest fully integrated lithium companies and General Lithium is a major producer of battery grade lithium carbonate in the Chinese market. Both have plans to expand their conversion capacity for lithium products in the near term. 

In its new Low Emissions Technology Roadmap, the CSIRO identified lithium as a current and potential future source of comparative advance for Australia in the global clean energy transition. 

"Australia has the world's fourth largest lithium reserves, and is currently the leading producer and is therefore well positioned to benefit from growth in the global battery market, which is likely to remain heavily reliant on lithium for the foreseeable future," the CSIRO report said.

"Furthermore, the global market for storage is expected to reach 1000 GW in the next 20 years, which is likely to drive an exponential increase in the demand for lithium."

ABOUT PILBARA MINERALS

Pilbara Minerals Ltd (ASX: PLS) is a mining and exploration company listed on the ASX, specialising in the exploration and development of the specialty metals Lithium and Tantalum. Pilbara owns 100 per cent of the world class Pilgangoora Lithium-Tantalum project which is among the largest Spodumene (Lithium Aluminium Silicate) projects in the world. Pilgangoora is also one of the largest pegmatite hosted Tantalite resources in the world and Pilbara proposes to produce Tantalite as a byproduct of its Spodumene production.