Alliance Mineral Assets enters lithium hydroxide market with Chinese joint venture
Under a new joint venture, Alliance Mineral Assets and Jiangxi Special Electric Motor Co. Ltd will produce and sell lithium hydroxide to the battery market.
West Australian lithium miner Alliance Mineral Assets (ASX: A40) is looking to add value by processing its spodumene into lithium hydroxide after inking a memorandum of understanding with Jiangxi Special Electric Motor Co. Ltd (Jiangte) to form a joint venture which would produce and sell the battery grade material.
Under the MoU, the parties have agreed to move into the downstream lithium products market within the next six to 12 months.
Alliance will export spodumene from its WA-based Bald Hill operation to Jiangte, which will then process the material into lithium hydroxide at its plant in China’s Jiangxi Province.
The joint venture will then sell the lithium hydroxide to third parties, with Alliance and Jiangte to equally share in the sales after recovering each party’s respective mining and conversion costs.
“The hydroxide joint venture provides for a rapid, low risk entry into downstream production and sales of battery-grade lithium products,” Alliance managing director Mark Calderwood said.
He added the parties would work towards formalising the joint venture by the end of June, as well as continuing talks with potential customers.
Bald Hill spodumene
Commercial spodumene production at Bald Hill began in mid-2018 with output ramping up to an expected 20,000t of lithium concentrate per month by 2020.
Initially throughout 2019 and 2020, the joint venture will only require about 20% of spodumene production from Bald Hill.
However, once Jiangte’s converter is fully operational it will process about 100,000tpa of spodumene to produce about 15,000tpa of lithium hydroxide.
Lithium hydroxide market
Mr Calderwood said he saw the demand for lithium hydroxide continuing to grow.
“Aside from traditional industrial uses a number of rechargeable battery manufacturers are now using lithium hydroxide in their products and this joint venture will enable Alliance to participate in this market,” he explained.
“We are proud of the relationship we have developed with Jiangte and the joint venture is a significant step forward in what is anticipated to be a long-term integrated relationship in the supply of battery cathode materials.”
The market reacted positively to Alliance’s joint venture news – pushing the share price up more than 6% to $0.17 by midday.