Piedmont reveals US$2.5b NPV for proposed Tennessee lithium hydroxide operation
Piedmont’s proposed Tennessee plant will produce about 30,000tpa lithium hydroxide over 30 years.
Integrated battery chemical developer Piedmont Lithium (ASX: PLL) is a step closer to realising its US-based downstream lithium hydroxide plans after a definitive feasibility study gave the Tennessee project an after tax net present value (NPV) of US$2.5 billion (A$3.71 billion).
Piedmont revealed the study results this morning, which also gave the proposed project a 32% post tax internal rate of return.
The study assumes 30,000 tonnes per annum of lithium hydroxide will be produced at a plant in McMinn County, Tennessee using Metso:Outotec’s conversion technology.
This conversion technology is described as “innovative and waste-reducing”.
Feed for the plant will be spodumene concentrate from market sources, including Piedmont’s existing offtake agreements with Sayona Mining (ASX: SYA) and Atlantic Lithium (ASX: A11).
The study assumes the Tennessee operation would secure an average price of US$26,000 per tonne for lithium hydroxide produced and pay about U$1,600/t for spodumene concentrate over its 30-year life.
A total initial capital outlay of US$809 million is expected. The model takes into account the US US$141.7 million grant from the US Department of Energy and a 10% tax credit under the 2022 Inflation Reduction Act.
Once operational, Tennessee is anticipated to bring in annual earnings before interest tax depreciation and amortisation of US$376 million, which would underpin annual after-tax cash flow of US$317 million.
Key US domestic producer
Commenting on the definitive feasibility study results, Piedmont president and chief executive officer Keith Phillips said he is “pleased” with the economics and US Government support, including the “positive impact” of the government’s Inflation Reduction Act, which favours domestic battery and critical minerals production.
“America’s pro-electric vehicle and battery manufacturing policies are providing an advantage to Piedmont at a time when many analysts are projecting lithium shortages to continue into the 2030s.”
He added the Tennessee project was positioned to become a “key resource” for domestic electric vehicle (EV) and battery manufacturers.
“Through long-term supply agreements with our partners, we can source raw material from spodumene that we own or in which we have an economic interest – providing greater control of our feedstock while capturing the economics of integrated production.”
Mr Phillips said with revenue expected from the re-start of its North American Lithium joint venture in Canada and its recently secured offtake agreements with Tesla and LG Chem, Piedmont will progress development of the Tennessee lithium hydroxide operation.
“Further, with the Metso:Outotec flowsheet, we believe we can sustainably produce critical lithium materials on a cost-effective basis for a more responsible profile compared to producers using sulfuric acid roasting,” he added.
Piedmont is targeting construction of the Tennessee operation beginning in 2024.