F E AT U R E D
Pilbara Minerals takes the plunge With the early success of its Battery Material Exchange platform, Pilbara Minerals is reaping the rewards of an alternative route to market. So, what’s next for the company and lithium sector?
A
ustralian lithium miner Pilbara Minerals has been a success story of the global mining industry in 2021. The Western Australian company has seen its share price balloon over the past 18 months, rising from as low as 13 cents in March 2020, to above $2 in August – a value it maintained until the time of writing. Lithium has experienced a spike in demand as a result of the evolving renewable energy transition, with the motorised world embracing electrification, and big electric vehicle (EV) players such as Tesla and Renault continuing to expand their capabilities. But Pilbara Minerals hasn’t just attracted the shareholder euphoria because of its offtake capability, the company has also instituted another means for which to market its spodumene concentrate. In March, Pilbara Minerals launched its own digital sales platform, the Battery Material Exchange (BMX). Created in collaboration with Perth technology company GLX Digital, BMX provides an avenue for interested parties to acquire current and future unallocated spodumene concentrate via a spot market. Across the first three auctions, Pilbara Minerals’ spodumene concentrate drew highest bids of $US1250 ($1684.50)/dry metric tonne (dmt), $US2240/dmt and $US2350/dmt, respectively. Attracting 25 bids online during a 45-minute auction window, the third auction saw a cargo of 10,000dmt sold at a target grade of 5.5 per cent lithia. The results verified a niggling curiosity for Pilbara Minerals, one which has been steadily cultivated across the past half decade or so. “I’ve been in the industry coming up to six years, which is not very long in the lithium industry, but there have already been big changes in that period of time,” Pilbara Minerals chief executive officer Ken Brinsden tells Australian Resources & Investment. “One of the more significant changes
– 12 –
that has emerged is the number of buyers that can now take spodumene from Western Australia.” Brinsden says spodumene has established a broader appeal, with more buyers building the infrastructure to support its commercialisation. “I was going up to China from early 2016 and you would only have to stop at three or four places and you probably covered where your sales were going to go,” he says. “A big contrast now is that there’s 25 genuine buyers. So, with that as a backdrop, we started to think about the distinction between selling in longer-dated offtake arrangements versus the potential in a spot market. “The spot market didn’t really exist, even up until arguably a year ago, but we saw its potential because of the number of buyers that were coming to market – some of them were new players to the industry; they hadn’t already secured offtake, but they’d built chemical capacity.” So, Pilbara Minerals took a punt,
understanding that with more buyers comes more competition to access the spodumene, especially if it can’t be accessed in offtake. And the prices speak for themselves; Pilbara Minerals sold the most expensive cargo of lithium ever when its third BMX auction took place in late October. While the overarching appeal of the spot market is understood, Brinsden believes there’s a few specific reasons why the BMX could be drawing viral interest. “If I was to guess what’s going on … firstly, it’s just a genuine shortage – I think we can take that as a given and it’s reflected in the price,” Brinsden says. “Secondly, it’s also possible that the buyers are taking a view about future price, i.e. the price is still getting higher in which case we should get in now. “And thirdly, it’s possible that the same buyer is contractually bound on the other side – having to deliver a chemical they don’t have raw material for.” Pilbara Minerals will continue scaling up its BMX platform in 2022, something which its Pilbara Minerals’ lithium is attracting big money at the spot market.
