Australia’s PLS primed for growth as lithium winter starts to thaw

[Redator]

After the most transformational year in the company’s history, Australia’s PLS (ASX: PLS) is ready for a recovery in the lithium price.

“The stage is set,” PLS managing director Dale Henderson declared during a site visit to the company’s flagship Pilgangoora operation in Western Australia’s Pilbara region on Friday.

Spodumene concentrate prices have gyrated wildly in recent weeks, bottoming at around $600 per tonne in early July before rising back towards $800/t.

Henderson said the recent spike in pricing appeared to be driven by a regulatory crackdown on lithium mines in China.

While current price moves are related to supply, he pointed to continued strong demand, with global electric vehicle sales reaching five million units in the June quarter, up 27% year-on-year (YoY), and forecasts pointing to 40% YoY growth in battery energy storage system demand.

“We believe pricing is unsustainable. We believe prices have to rise,” Henderson said.

“We are not surprised to be going through a low part of the cycle, given the strong highs we had in ’22, so for us, it’s just more a case of sticking to our strategy, looking through this part of the cycle to what we think will ultimately be some strong price appreciation in the future, but it’s incredibly difficult to forecast when that might be.”

Pilbara Minerals says lithium prices may have bottomed

Pilgangoora humming

Pilgangoora, 140 kilometres south of Port Hedland, is one of the world’s largest hard rock lithium operations.

A recent resource upgrade to 446 million tonnes (Mt) at 1.28% lithium oxide makes Pilgangoora the world’s largest hard rock lithium resource, overtaking the Greenbushes deposit in WA.

The 12 months to June 30, 2025, was a period of expansion for PLS, which was previously known as Pilbara Minerals.

Capital expenditure during the period was A$569 million ($368 million) as the company completed the P1000 project to take spodumene concentrate production from Pilgangoora to 1Mt per annum.

Henderson said Pilgangoora “shot the lights out” in the June quarter, with production rising by 77% to 221,300t of spodumene and unit costs dropping by 10% to $397/t.

Full-year production of 755,000t beat the top end of the guidance range of 700,000-740,000t, while unit costs of A$627/t, or $406/t, were within guidance.

The cash margin from operations for the year was A$192 million and PLS had A$1 billion cash at the end of June.

The 2026 financial year will be about optimization and cost reduction, leveraging newly installed ore-sorting technology.

The company is targeting average lithium recoveries of 72% for the year.

“If you don’t have an ore-sorter, you’re not in the game,” PLS chief operating officer Brett McFadgen said.

“Our recoveries start with a seven – others’ start with a five or six.”

Guidance for FY26 has been set at 820,000-870,000t of spodumene at unit costs of A$560-600/t.

“The September quarter is about moving into steady state,” Henderson said.

“There will be an element of optimization, and arguably, optimization carries on forever, because the team’s always focused on more recovery, more improvements, but FY26 is very much the year of steady state for the platform and improving what it can do.”

Pilbara Minerals eyes $800 million road to double lithium output

Ready for spring

PLS paused the construction of its mid-stream demonstration plant at Pilgangoora last year due to weak market conditions but restarted construction in February after receiving a A$15 million grant from the WA government.

The plant, which is being developed in conjunction with Calix (ASX: CXL), aims to produce a higher-value, lithium-enriched product at Pilgangoora.

The plant, which is due to be completed in the December quarter, is part of PLS’ strategy to become more deeply integrated in the battery material supply chain.

As part of that goal, PLS also has an 18% stake in POSCO’s 43,000tpa lithium hydroxide facility in Gwangyang, South Korea.

The partners sold 3,070t of battery-grade product to three customers during the June quarter from Train 1, while certification of product from Train 2 is underway.

“I’m pleased to say that’s so far gone really, really well, and we’re delighted to have our minority participation with POSCO,” Henderson said.

Back at Pilgangoora, the operation’s smaller Ngungaju plant is on care and maintenance due to market conditions.

“We’ve guided that we can bring that on in approximately four months, so we have that capacity idle and ready to deploy quite quickly if there’s a price rally,” Henderson said.

He added that PLS wasn’t phased by other latent capacity in the global lithium sector.

“At the end of the day, this is a strong growth market for lithium, and ultimately, as the industry grows, we expect the volatility to settle out and for the larger, lower cost producers to occupy the main part of the supply chain, ie groups like PLS,” he said.

In the mid-term, PLS is undertaking the P2000 feasibility study, which could see Pilgangoora’s production capacity rise to 2Mt per year.

Work on the study has slowed and isn’t expected to be finalized until the 2027 financial year.

Earlier this year, PLS completed the $369 million acquisition of Latin Resources to take ownership of the large Colina hard rock lithium project in Brazil.

The company expects to release development studies for Colina in the June 2026 quarter.