The Calix (ASX: CXL) and the Pilbara Minerals (ASX: PLS) together have decided to put their non-contracted conduction works at their $105 midstream demonstration plant project on hold due to the current downturn in the lithium market located at Pilbara’s Pilgangoora project in Western Australia.
The initiative received $20 million in funding from the federal government’s modern manufacturing initiative. An initial payment of $8 million has been made for the midstream demonstration plant. This news led to a 27% drop in Calix shares, hitting an intra-day low of $0.725. The joint venture between Calix and Pilbara Minerals aimed to build a demonstration plant at the Pilgangoora project.
It will utilize Calix’s patented Calcinatin technology to produce lithium salts. Pilbara Minerals will place its low-capacity Ngungaju plant on temporary care and maintenance starting December 1, 2024, citing unfavorable market conditions.
The company noted that current spodumene concentrate prices, which range from US$750-$800 per tonne, fall short of the industry’s sustainable consensus price of US$1400 per tonne. The Pilbara minerals lithium sales took a hit in the September quarter, with its prices plummeting to US$682 per tonne, down from US$840 per tonne in the previous quarter. This 19% decline reflects the ongoing challenges in the global lithium market.
Calix’s technology uses mineral processing with indirect heating, enabling efficient, precise, and flexible operations. This lets you use renewable energy powering and also captures unavoidable industrial emissions. Calix Limited announced that its mid-steam demonstration plant project remains on budget and reached 60% completion as of September 30, 2024.
Despite temporarily deferring construction due to current market conditions, CEO Phil Hodgson expressed optimism about the project’s future. Phil Hodgson said that the company is pleased with the progress made so far, which enables them to rapidly restart and move to commissioning once market conditions improve.
He also stated that the company will provide another project update during its annual general meeting on November 22, 2024. According to Hodgson, the company, in partnership with Pilbara Minerals, aims to utilize the benefits of electric calcination for more cost-effective and environmentally friendly lithium processing, aligning with the global lithium industry’s sustainability goals.
Pilbara Minerals CEO Dale Henderson justified the temporary halt in the joint venture’s development, citing the need to align expenditures with favorable market conditions. Henderson stated that Pilbara Minerals remains committed to the midstream strategy and its partnership with Calix.
He talked about the project’s potential to control the lithium supply chain through reduced emissions and value-added processing. The joint venture plans to reassess resuming the project once market conditions improve or additional government support is secured.
Currently, construction works in progress will be completed before the project is paused. Calix and Pilbara Minerals are collaborating with government agencies which will let them explore further funding options. The companies are investigating opportunities to scale and deploy the technology globally, targeting other lithium projects.
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