It’s a clear message on the robust outlook for electric vehicles: customers of lithium major Pilbara Minerals are not only financing its next project expansion but are already pressuring the producer for additional output.

Pilbara Minerals (ASX:PLS) told investors the Stage 2 funding package, underpinned by key customers Ganfeng Lithium and Great Wall Motor Company, will see production at its Western Australian Pilgangoora lithium-tantalum project ramp up to 5 million tonnes a year.

These customers are rapidly scaling up their respective supply chains, prompting Pilbara Minerals to target commissioning of Stage 2 from the March quarter 2020 as well as kicking off studies on Stage 3.

“Our key customers have recently visited site and they clearly like what they have seen,” Pilbara Minerals boss Ken Brinsden said.

“They are now fulfilling their commitments by providing capital to underpin the Stage 2 expansion in order to secure their full Stage 2 offtake allocations.

“At the same time, they have made it clear that they would like to see the project grow further, prompting us to undertake studies to evaluate a potential Stage 3 expansion to at least 6.2mtpa and potentially up to 7.5mtpa.

“This should send a clear message about the robust outlook for the lithium market as far as our Tier-1 customer base is concerned, and demonstrates the secure position the world-class Pilgangoora project commands as part of a global lithium-ion supply chain that is growing rapidly.”

This rapid scale-up will also prompt Pilbara Minerals to consider a larger chemical conversion facility with South Korean partner POSCO.

POSCO and Pilbara Minerals have signed a non-binding agreement to consider a larger, jointly owned chemical conversion facility of up to 40,000 tonnes a year lithium carbonate equivalent (LCE) – up from 30,000 tonnes a year — to produce battery grade hydroxide and carbonate products.

Pilbara Minerals need to exercise its right to participate as a 30 per cent joint venture partner in the South Korean JV chemical plant on or before 28 February 2019.

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