An exclusive distribution agreement (EDA) and a memorandum of understanding with Shantou Fancy Mining (SFM) Industry warrants the supply of about 25% of the project’s planned capacity to the Chinese glass and ceramics industry, with first delivery due in 2017.
SFM is a big player in that space and will be Pilbara’s exclusive distributor within China’s glass, ceramics, foundry and metallurgical manufacturing industries.
The agreement excludes direct sales to lithium chemical converter and producers.
Under the MOU, the parties have agreed to start discussions about the signing of binding off-take agreements, with volumes and prices to be negotiated based on global market prices and floor and cap prices to be agreed for the first year of supply.
The SFM agreements come just two weeks after Pilbara signed an MOU with two leading Chinese lithium carbonate producers for more than 70% of future Pilgangoora concentrate sales.
Pilbara Minerals executive director Neil Biddle said the agreements collectively were a very positive development for the Pilgangoora project, its financing and future operations, and reinforced the robust outlook for lithium in global markets.
“These latest agreements with SFM continue our strategy of building long-term strategic relationships with lithium suppliers and customers, which we believe will be a vital component of the project’s successful development,” he said.
Recent test work conducted by SFM and others demonstrated Pilgangoora’s potential to supply low iron, high grade spodumene, paving the way for it to emerge as the second largest global supplier of high quality spodumene concentrates.
“Given the extremely robust outlook for lithium in the coming years as the rapidly growing battery sector increasingly drives demand for lithium compounds and minerals – supplementing traditional demand from the glass and ceramics sectors – we expect to see a lot more interest developing in this project,” Biddle added.
Pilbara is fast-tracking the development of the Pilgangoora project and has started a prefeasibility study and a major resource in-fill and expansion drill program.
As part of this fast-track strategy, the company has engaged with potential customers and off-take partners in China, North America, Europe, the Far East and southeast Asia, which is expected to result in the signing of additional non-exclusive and non-binding MOUs and binding sales agreements.