POSCO agreed to buy up to 240,000 tonnes of lithium concentrate per year from Australia's Pilbara Minerals Ltd., Reuters reported Feb. 27, citing a company statement.

As part of the deal, POSCO will take a 4.75% stake in Pilbara Minerals for A$79.6 million by acquiring the ASX-listed company's convertible bonds.

The deal will secure a stable source of raw material for the South Korean company's plans to make about 30,000 tonnes of lithium products per year beginning in 2020.

Pilbara Minerals is developing its Pilgangoora lithium mine in Western Australia, where first production of about 300,000 tonnes of lithium concentrate is expected in the second half.

In addition, Pilbara Minerals plans to take a 30% stake in POSCO's proposed lithium factory.

A recent pre-feasibility study for stage two of the Pilgangoora lithium-tantalum project estimated a posttax net present value, discounted at 10%, of about A$2.10 billion, an internal rate of return of 56% and a three-year payback period.