Pilbara Minerals signs lithium offtake agreement with China’s Sichuan Yahua

Pilbara Minerals’ (ASX: PLS) spodumene is proving particularly popular among Chinese lithium firms, with the company signing a new offtake agreement with Sichuan Yahua Industrial Group.

The new deal follows the early February execution of an amendment to its existing offtake agreement with Chengxin Lithium.

The Yahua offtake agreement with is for the supply of spodumene concentrate from the company’s 100%-owned Pilgangoora operation in Western Australia, commencing in calendar year 2024 (CY24) for a three-year term.

Flexible supply options

This year, Pilbara Minerals will supply Yahua with 20,000 tonnes (kt) of spodumene concentrate (with an option for up to an additional 60kt at Pilbara Minerals’ election) resulting in a total supply in CY24 of between 20kt to 80kt.

The following year, Pilbara Minerals will supply 100kt of spodumene concentrate (with an option for up to an additional 60kt at Pilbara Minerals’ election) resulting in a total supply in CY25 of between 100kt to 160kt.

The same amounts have been agreed upon for CY26.

Major lithium player

Yahua is one of the world’s largest lithium hydroxide producers, having strong connections across the lithium supply chain with key customers including Tesla, LG Energy Solutions, LG Chem and Contemporary Amperex Technology Limited (CATL).

Pilbara Minerals’ managing director and chief executive officer Dale Henderson said the new offtake consolidates an established relationship between the two companies, who have previously completed a number of sales together.

“The agreement enables Yahua to further expand its supply chain commitments with key global battery customers and builds out Pilbara Minerals’ medium-term sales profile whilst preserving long-term optionality as we assess downstream opportunities in line with our growth strategy.”

Chengxin agreement extended

In early February, Pilbara Minerals and leading global integrated lithium chemicals producer Chengxin agreed to extend a previous offtake arrangement.

Under an existing short-term agreement with Chengxin signed in 2023, Pilbara Minerals had agreed to supply 70kt of spodumene concentrate from Pilgangoora in financial year 2024.

The new amendment results in a significant extension and expansion of the offtake agreement until the end of CY26.

Pilbara Minerals will supply an additional 60kt of spodumene concentrate, taking the total supply in CY24 to 85kt.

For the following two years, Pilbara Minerals will supply 150kt of spodumene concentrate.

Battery material demand

The additional spodumene supplies will assist Chengxin fulfil demand from its growing international customer base for lithium battery materials supply.

Customers of Chengxin – which has operations across China, Indonesia, Argentina and Zimbabwe – include BYD, LG Chem, SK On, CATL and Hyundai.

Pilbara Minerals’ Pilgangoora operation produces spodumene and tantalite concentrates.

The company has developed a consortium of high-quality, global partners including POSCO, Ganfeng Lithium, General Lithium, Yibin Tianyi, Chengxin Lithium and Yahua.