Pilbara Minerals expands offtake agreement with Chengxin Lithium Group

The Pilbara Minerals (ASX: PLS) share price rose more than 5% on Wednesday after the company announced it had amended an offtake agreement with Chengxin Lithium Group which extends and expands the supply of spodumene concentrate to the lithium chemical converter.  

Under the new terms of the agreement, Pilbara Minerals will supply an additional 60kt of spodumene concentrate to Chengxin in 2024, taking the total supply for the year to 85kt. 

Additionally, Pilbara Minerals will supply 150kt of spodumene concentrate to Chengxin in 2025 and in 2026 Pilbara Minerals will supply 150kt of spodumene concentrate Chengxin.  

The pricing is consistent with the previous agreement and all spodumene concentrate volumes will be sold based on the prevailing market price, according to Pilbara Minerals.  

Pilbara Minerals’ managing director and chief executive Dale Henderson commented on this. 

“We are very pleased to be extending and expanding our relationship with Chengxin, a leading lithium chemical producer and supplier to customers such as BYD, LG Chemical, SK On, CATL and Hyundai,” he said. 

“This amendment highlights the demand for Pilbara Minerals’ product and is a continuation of our strategy to expand our partnership with leading global lithium producers in the medium term while we progress the development of our long-term downstream partnership strategy.”  

Listed on the Shenzhen Stock Exchange, Chengxin is a global integrated lithium chemicals producer with operations across China, Indonesia, Argentina and Zimbabwe.  

Chengxin chairman Zhou Yi also commented on the agreement. 

“Both Pilbara Minerals and Chengxin are committed to the energy transition and are focused on extending our respective positions as high quality, low-cost producers in the growing lithium battery materials market,” he said. 

“We are pleased to be extending our agreement with Pilbara Minerals, a recognised leader in the mining and development of lithium assets. This agreement further deepens our valued partnership with Pilbara Minerals and we look forward to supporting our global customers through the continued provision of high quality and cost-competitive lithium materials.”  

The increased supply to Chengxin is separate to Pilbara Minerals’ strategic partnership process with Chengxin which continues in parallel with the new agreement and remains on track to conclude in the March Quarter of 2024, according to Pilbara Minerals.