Ground Breakers: Pilbara Minerals sinks on guidance downgrade

It takes a lot to take the wind out of a lithium company’s sails right now, but a guidance downgrade will do it.

Pilbara Minerals (ASX:PLS) has pinpointed the industry-wide shortage of skilled personnel in WA behind the still-locked Covid hard border for delays with commissioning ramp up and plant shutdowns at its main Pilgangoora and new Ngungaju processing plants.

It has frustrated PLS’ efforts to capitalise off the strong lithium price environment, with average prices for its 6% spodumene concentrate expected to be at the upper end of its US$1650-1800/dmt guidance.

PLS now expects to produce 84,000-95,000t of spodumene in the December quarter, down from guidance of 90,000-115,000t, with shipped tonnes expected to lag production.

It has seen annual concentrate production guidance also reduced significantly from 460,000-510,000t to 400,000-450,000t with shipping tonnes down from 440,000-490,000t to 380,000-440,000t.

“We have made excellent progress in the construction and initial commissioning of the expanded facilities at Pilgangoora, with construction of the Pilgan Improvements Project being delivered on time and on budget,” PLS MD Ken Brinsden said.

“That said, as we have started ramping up capacity across the entire Pilgangoora site, Pilbara Minerals has not been immune to the skilled labour shortages currently impacting the WA resource sector.”

“As a result of these impacts, which have delayed elements of our commissioning and ramp-up plans, we have updated production guidance for the December Quarter as well as for FY22.”

“Notwithstanding this, Pilbara Minerals remains incredibly well-placed to make a significant contribution towards satisfying the world’s burgeoning appetite for lithium raw materials,” Brinsden said.

“Recent price developments are underlining the emergence of significant raw material supply shortages and Pilbara Minerals is doing everything in its power to respond quickly to customer demand with additional production capacity, both in the short and medium term.”

Pilbara Minerals shares fell 8.3% this morning.

The company also said it is nearing completion on a scoping study for a mid-stream processing initiative with boom green energy stock Calix (ASX:CXL) which it says will deliver lithium with a “materially lower carbon footprint” by using electric calcination to produce a high purity lithium salt.

“We have also been making excellent progress with our mid-stream strategy to develop value-added products from Pilgangoora through our partnership with Calix, and we have separately updated the market via an announcement on this exciting project today,” Brinsden said.