Lithium play Piedmont under pressure to fast-track development plans
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Who said lithium was in the toilet? Not the potential customers that advanced US-based explorer Piedmont (ASX:PLL) is speaking with.
Piedmont will now aim for first lithium chemical production in late 2022 after “strong interest” from prospective lithium hydroxide customers.
Mined material is processed into either lithium carbonate or lithium hydroxide, which can be sold to make cathode material for lithium-ion batteries.
Piedmont says conversations with prospective customers have been “encouraging” over the past three months, despite pervasive negative market sentiment.
There are three themes common to all these discussions, says Piedmont chief Keith D. Phillips.
“(1) the dramatic growth in lithium hydroxide required to support the EV platforms currently being developed;
“(2) the strong desire of lithium customers to diversify their supply sources away from the dominant China market; and
“(3) the concrete plans of selected parties to aggressively develop their battery supply chains in the United States and Europe,” he says.
There’s a lithium chemical shortfall looming from 2023, and these customers know it.
So Piedmont is compressing its project timeline into a single stage – instead of selling spodumene first – which will result in integrated operations from day one.
Everyone can see how the WA hard rock producers are struggling with profitability. This is why the next crop of battery materials producers — like Piedmont, Infinity Lithium (ASX:INF) and Talga (ASX:TLG) — are building vertically integrated businesses.
This integration should lead to improved project economics given the higher margins associated with the lithium chemical business, while eliminating spodumene concentrate sales into the Chinese market, Phillips says.
“Ours is the only spodumene project in the United States, and it is the only US lithium project focused on the fast-growing hydroxide market,” guy says.
“We are ideally located to serve the rapidly growing battery supply chains in both the United States and Europe.”