Aspiring lithium chemical developer Piedmont Lithium (ASX: PLL) has achieved a major milestone after bench-scale test work generated battery-quality lithium hydroxide.
The lithium hydroxide was made from spodumene recovered from Piedmont’s namesake project in the US Carolina Tin-Spodumene Belt.
Piedmont noted the quality results of its lithium hydroxide “compared favourably” to current market specifications – with purity on par with other producers Livent and Ganfeng.
“The successful production of battery quality lithium hydroxide from ore samples taken from the company’s drill core represents a major milestone for Piedmont,” president and chief executive officer Keith Phillips said.
“The Carolina Tin-Spodumene Belt is renowned for its pure spodumene mineralogy, and we are very pleased that this testwork program confirms the low-impurity profile of our 100%-owned mineral resource.”
Mr Phillips said the company’s vice president of sales and marketing Austin Devaney would market the product with prospective customers in automotive, battery and cathode industries.
Advancing lithium hydroxide production plans
Today’s positive testwork results follows a positive feasibility study in late May that evaluated the economic viability of Piedmont developing a standalone chemical plant that would be fed from spodumene sourced on the global market.
Under the pre-feasibility study, the Merchant project was given a US$714 million net present value and 26% internal rate of return.
With spodumene sourced from the open market, the plant would generate 22,700 tonnes per annum of lithium hydroxide for 25 years.
The initial capital outlay is estimated at US$377 million to deliver annual earnings before interest tax depreciation and amortisation of US$149 million.
Piedmont also completed a scoping study into developing an integrated spodumene mine and lithium hydroxide plant.
The scoping study gave the integrated mine and downstream plant an NPV of US$1.1 billion, with an after-tax IRR of 26%.
Forecast annual EBITDA has been estimated at US$218 million after capital expenditure of US$545 million.
Revenue under both proposals is based on an assumed long-term average lithium hydroxide price of US$12,910/t and annual lithium hydroxide production of 22,720t.
Strategy behind US-based lithium hydroxide plant
With China responsible for all global lithium chemical production, Mr Phillips said he expects global automotive companies will increasing seek alternative supplies to China.
“North Carolina is ideally positioned to benefit given its proximity to major auto markets in the US and Europe, and the deep lithium talent pool resident in the region,” he added.
The region is known as the “cradle” of the world’s lithium industry and has all required infrastructure including a deeply experienced talent pool, access to inexpensive power, and a stable regulatory environment with favourable taxes.