Pilbara Minerals (ASX:PLS) share price lower despite joint venture news

The Pilbara Minerals Ltd (ASX:PLS) share price is on the move on Tuesday after announcing joint venture plans with Calix Ltd (ASX:CXL)…

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The Pilbara Minerals Ltd (ASX: PLS) share price is dropping on Tuesday morning.

At the time of writing, the lithium miner’s shares are down 3% to $1.26.

Why is the Pilbara Minerals share price lower?

Investors have been selling the company’s shares today despite it announcing a memorandum of understanding (MOU) with multi-award-winning Australian technology company Calix Ltd (ASX: CXL).

According to the release, the MOU covers the development of a joint venture project to develop a midstream lithium chemicals refinery.

The two parties will undertake a scoping study to assess a new refining process incorporating Calix’s unique calcination technology and subsequent production of a concentrated lithium salt midstream product for lithium batteries.

The release explains that Pilbara Minerals currently processes its ore to produce a spodumene concentrate which is then shipped to customers overseas for conversion into lithium carbonate or lithium hydroxide. This is ultimately used for in the production of lithium ion batteries.

However, should this midstream lithium chemicals refinery be developed, it could cornerstone a full battery production supply chain in Australia.

Management notes that the project is in strong alignment with Government strategies to on-shore processing and manufacturing, more sustainable mining and processing, and critical minerals strategies for battery materials.

Furthermore, with spodumene-derived lithium salts from Australian producers potentially hitting 500kT by 2030, and with current lithium carbonate prices well in excess of US$10,000 per tonne, the two companies believe this represents a considerable licensing opportunity for the joint venture and a multi-billion-dollar export value opportunity for Australia.

The scoping study will run until late 2021. If positive, Pilbara Minerals and Calix intend to form a joint venture to build a demonstration facility, starting with a Definitive Feasibility Study (DFS).

Management commentary

Pilbara Minerals’ Managing Director, Ken Brinsden, said: “Firstly, the conventional calcination of fine ore incurs increased losses via dust. Secondly, legacy calcination techniques are very energy and carbon intensive, using fossil fuels in an environment of significant heat losses. And lastly, the lack of uniform temperature control can lead to either incomplete phase change or partial melting of the concentrate impurities, both of which hinder the recovery of lithium in subsequent extraction processes.”

“Calix and Pilbara Minerals have conducted calcination trials of Pilgangoora spodumene in its electrically fired BATMn reactor, at Calix’s Bacchus Marsh facility, and it successfully demonstrated high conversion rates, zero dust emissions and avoided any partial melting concerns. With these promising results, we will now move to a scoping study phase to investigate installing a calciner and downstream demonstration processing plant at Pilgangoora to allow the processing of fine, low grade ore to produce lithium salt material for export overseas.”

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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