Australia-based lithium producer Pilbara Minerals has announced the execution of binding terms for a downstream joint venture (JV) with Posco, to develop and operate a 40ktpa lithium hydroxide and carbonate chemical conversion facility in South Korea.

The establishment of JV is subject to the completion and approval of an initial business plan and budget execution of definitive agreements and board approvals from both parties, which are anticipated to take place in the fourth quarter of 2019.

Pilbara Minerals managing director and CEO Ken Brinsden said: “We are delighted to have executed binding terms for our joint venture with POSCO, cementing our long-standing relationship with a world-class strategic partner in the rapidly-growing South Korean lithium raw materials market.

“This joint venture will give Pilbara Minerals significant exposure to one of the world’s most dynamic and fastest growing markets for lithium chemicals, among Tier-1 South Korean battery manufacturers.”

The conversion facility is planned to be expanded from 30ktpa to 40ktpa lithium carbonate equivalent (LCE) and supported by POSCO’s leading purification technology PosLX, which produces high-grade lithium hydroxide and lithium carbonate chemicals.

Under a technology licence agreement,  the PosLXtechnology will be made available to the joint venture through its lifetime on commercial terms.

Pilbara Minerals will hold an initial 21% interest in the joint venture

Pilbara Minerals will hold an initial 21% interest in the JV, with an option to increase to 30%, with its equity funding contribution. The initial 21% investment in the JV is expected to be funded through the previously announced A$79.6m (£44m) convertible bond agreement with POSCO.

Pilbara Minerals said that the funds from the convertible bond facility are available following the formation of the joint venture and completion of other conditions, which are expected to be met during the last quarter of 2019.

Brinsden added: “Supply to the proposed South Korean chemical plant will also have the benefit of further diversifying our spodumene concentrate sales arrangements over time.

“We are very pleased to have the opportunity to partner with a company like POSCO and we are looking forward to the development of the JV Conversion Facility in tandem with the Stage 2 expansion of the Pilgangoora Project.”