PLS, Ganfeng eye lithium processing plant outside China amid supply deficit

PLS Group Ltd. and Ganfeng Lithium Group Co. Ltd. are considering a midstream or downstream facility outside China amid an expected prolonged lithium deficit, according to the Australian miner's Managing Director and CEO, Dale Henderson.

Henderson told an industry event in Australia Aug. 5 that there is "arguably" already a shortfall in global lithium supply, given demand is strongly compounding and supply is struggling to keep up.

PLS, the world's largest independently owned hard rock lithium miner according to its website, sees "a more probable demand deficit occurring," Henderson said during an Aug. 24 fiscal 2025-26 (July-June) results call. This is based on the company's "conservative" demand assumptions taking into account probable supply, including various brownfield expansions and restarts, as well as Chinese mines.

Greenfield projects are "few and far between, [which] have been approved to date, let alone getting on with the build and commissioning. What that sets up is essentially the potential for ... a more elongated deficit period," Henderson said.

S&P Global Energy CERA's Aug. 21 Mid-Term Outlook forecasts that the lithium chemicals market will move from a tight balance in 2026 to a slightly wider surplus in 2027 before reaching another wide surplus in 2031. An 82,000 metric tons deficit will appear in 2033, deepening to 188,000 mt in 2035.

"Projects entering production in 2026 are expected to add significantly higher volumes in 2027 as they ramp up to full capacity," including Australian restarts, greenfield developments and brownfield expansions, such as Rio Tinto Group's Sal de Vida and Salar del Hombre Muerto Phase 1B in Argentina, CERA's report said.

"The deficit schedule will rest on whether these project expansion plans will push through as scheduled. Right now, given the large volumes expected to come online in 2027 and 2031, the deficit will have to wait until 2033," Jomar Camposano, CERA analyst, said in an Aug. 24 interview.

Growth projects

Henderson said PLS' growth projects will only go ahead subject to market conditions, including feasibility work due in the December quarter to double capacity at Pilgangoora in Western Australia to 2 million metric tons/year, and studies on the earlier-stage Colina project in Brazil acquired in February 2025 due toward the end of 2027.

First product is also due from a midstream demonstration plant in Western Australia in the September quarter, with over 3,000 mt/y planned capacity of concentrated lithium-phosphate salt product from about 27,000 mt/y of spodumene feedstock.

PLS originally agreed in March 2024 to study a 32,000 mt/y lithium conversion plant with Ganfeng. PLS chose the Chinese company for its "best-in-class conversion intellectual property, with access to proprietary flowsheets for both lithium carbonate and battery grade lithium hydroxide, developed and refined via the operation of seven lithium chemical plants," according to the Australian miner's 2024 statement.

Further to this, Henderson said on the Aug. 24 call that "the objective with the study with Ganfeng is to look at additional chemical processing outside of China somewhere."

"We've been working together studying globally, comparing and contrasting different industrial parks, and as to what chemical type we've been studying, that too. Both Ganfeng and PLS are very open to full battery product manufacturing or potentially midstream. So that's a potential option."

PLS' FY 2025-26 revenue rose 152% to A$1.93 billion as both sales and production increased 17% to 891,600 mt and 879,500 mt, respectively — both record levels. The average estimated realized price for SC6 product was up 122% to US$1,708/mt, according to its results.

Platts, part of S&P Global Energy, assessed the lithium 6% spodumene price at US$2,273/mt Aug. 21, up from $975/mt a year prior.

Shifting electricity system

PLS' work on further downstream options comes as the demand picture continues to evolve.

"In the last price rally, what appeared to be some of the more easier-to-start operations now are all plugged in. The next wave of supply ... it's probably going to be more challenging given that in most cases, these mines are more difficult locations or difficult domiciles," Henderson said.

Battery costs have fallen by about 90% since 2010, making electrification increasingly competitive on economics rather than incentives alone, while in June, more than 1 in 4 vehicles sold globally were electric, with penetration reaching 27%, Henderson said.

Energy storage also continues to grow rapidly, with global battery energy storage investment expected to grow from about $80 billion in 2025 to over $100 billion in 2026, according to the International Energy Agency.

Behind both EVs and storage is a "rapidly changing electricity system," Henderson said.

"Under the IEA's stated policies scenario, global electrification generation increases by more than 50% to 2040 with solar and wind alone reaching 46% of generation. As that share of intermittent generation increases, so does the need for energy storage," Henderson said.

The scale and breadth of demand is also changing, with Chinese battery production up 66% year-to-date, while lithium chemical inventories have fallen to 57% over the past 12 months and now represent about 2.5 weeks of demand, Henderson said.