Pilbara Minerals Unchained

It seems like the massive drop in lithium prices over the past year hasn’t pull the reins of Pilbara Mineral’s (ASX: PLS) ambition of keeping market dominance whilst expanding their production capabilities and diving deeper in the supply chain through their JV with POSCO.

Not long ago the company produced a muscle flexing display with the post of their FY24 Q2 activities report in which they spectacularly published a 22% increase in production, 9% increase in sales, 14% cost reduction (which helped to provide a pretty decent margin during the quarter) and an enviable $2.1B cash balance…not too bad when bearish reports in the lithium market are dropping like rotten apples from the tree huh?

But the good news didn’t stop there. On the operational and commercial space, PLS announced the advanced state of their P680 expansion project with the primary rejection facility now fully integrated, the start of commissioning activities of train 1 in their hydroxide venture with POSCO, the increase of volume to be supplied to Gangfeng as part of their offtake agreement and their P1000 expansion project progressing on schedule…must feel like an uppercut to the chin of the swarm of shorters wanting to feast on the company.

And it turns out PLS keeps pulling more rabbits out of their seemingly bottomless magic hat by announcing on February 7th the extension and expansion of their offtake agreement with Chengxin Lithium, whereby instead of supplying 70kt of spodumene concentrate to the end of FY24 the company will now sell them an additional 60kt to the end of CY24, 150kt in CY25 and 150kt in CY26, totaling a whopping 360kt in additional supply, all of that at the prevailing market price…I hope all those shorters have nerves of steel!

Two offtake agreement extensions in such a relatively short time frame not only may be shaking the nerves of all those funds shorting PLS, but must also be sending shockwaves to the market signaling the still strong appetite for Australian spodumene in the long term and the refiners’ desire to secure supply from good quality sources…

Would this be a sight of the light at the end of the tunnel for the lithium market?