Pilbara Minerals flags first-half loss of $68m to $71m on POSCO lithium battery materials joint venture

Pilbara Minerals has warned investors it is likely to book a first-half net loss of up to $71 million as it ramps up a lithium battery material joint venture project with South Korea’s POSCO. The Dale Henderson-led lithium miner, which recently re-branded to PLS, flagged the hit in an update to the market ahead of the release of its latest financials next week. Underlying earnings before interest, tax, depreciation and amortisation are expected to come in at between $71m and $75m, which PLS said reflected record production and sales volumes from its core Pilgangoora lithium mining operations near Port Hedland and cost reductions from the P680 expansion project at Pilgangoora. A net loss after tax of $68m to $71m was flagged. The expected loss predominately relates to PLS’ investment in a joint venture project with POSCO — the PPLS JV — to produce 43,000 tonnes a year of lithium hydroxide monohydrate in South Korea. Prices for lithium hydroxide monohydrate are currently at a low point, PLS says, and the JV is currently in a cash-burning ramp-up phase. It has also been weighed down by a pause in plans last October to bring online a demonstration plant to create a more lithium-enriched product from the spodumene concentrate cranked out at Pilgangoora. The plant, a JV between PLS and Calix, is about two-thirds complete but has been put on ice “until market conditions are supportive or further government support for project continuation can be secured”. But there is renewed hope of a resumption after the joint venture received $15m in grant funding through the State Government’s Investment Attraction Fund. Stripping out the JV headaches, PLS is forecasting an underlying net loss after tax of between $5m to $7m. Mr Henderson said PLS delivered a strong set of operating outcomes for the first half, including a new record for total production and sales from Pilgangoora. “Beyond our core business, we advanced our chemicals strategy to increase our exposure to value-added battery chemicals while further diversifying our supply chain,” he said. “During the period, the PPLS JV and mid-stream demonstration plant project progressed through their ramp-up and development phases respectively. “These projects continue to reflect the effects of current lower market pricing, development costs or ramp up costs as shown in the expected results. “We remain very positive about the long-term potential of these strategic investments and both projects offer a staged investment pathway for future scale-up at PLS’ discretion. “We continue to be excited about the long-term outlook for the lithium market and will grow the business in step with market dynamics.” Prices for the spodumene concentrate PLS and all of WA’s other lithium miners produce rebounded more than 20 per cent in January after more than a year of steep declines But rain came down on the parade last week following reports that CATL — the world’s largest electric vehicle battery manufacturer — will soon restart operations at its massive lithium mine in China. The mine accounts for about 5 per cent of global supply.