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Australia's Pilbara Minerals cuts lithium ore output guidance due to plant issues

Highlights

Shipped volumes to be less than production

Oct-Dec output seen around 12.2% lower from previous estimates

Australian lithium miner Pilbara Minerals has lowered its production guidance for spodumene concentrate at its flagship Pilgangoora operation for the October-December quarter and fiscal year 2021-22 (July-June) because of plant issues, which have been complicated by tough border restrictions in Western Australia, the company said Dec. 21.

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"Delays have been experienced with both the Ngungaju Plant re-start and the Pilgan Plant Improvements Project, particularly through plant commissioning, ramp-up initiatives and extended plant shutdowns," the company said.

"The company's ability to operate and improve the Pilgan Plant and restart the Ngungaju operation have been further impacted by the extended border closures which are now impacting the ability of all mining companies in Western Australia from accessing key personnel in construction, production and maintenance roles," it said.

Borders of Western Australia remain closed in the wake of the coronavirus pandemic, with such measures only seen easing in February, according to local media reports.

Pilbara is now expecting to produce about 85,000-95,000 mt of spodumene concentrate during the October-December quarter, which is down about 12.2% from the average range of 90,000-115,000 mt estimated previously.

The miner noted that shipped tons will likely be less than the production, pending vessel timings.

The company cut FY 2021-22 concentrate production guidance to 400,000-450,000 mt from 460,000-510,000 mt. It pegged shipped tons for the FY 2021-22 at 380,000-440,000 mt, compared with the prior range of 440,000-490,000 mt.

The news comes at a time when record-high lithium prices have been creating ripples through the market value chain.

Pilbara said that record pricing for lithium chemicals and spodumene concentrates driven by short supply has seen the company receive strong pricing for its products. It expects the average price received in the October-December quarter to be at the high end of the previous guidance of $1,650-$1,800/mt CIF China SC6.0 basis.

Prices of lithium spodumene with a 6% minimum lithium oxide content FOB Australia have risen more than 5.6 times from December 2020, reaching $2,700/mt Dec. 17, according to S&P Global Platts data.

The global demand for lithium was surging as auto manufacturers step up the production of electric vehicles.

Australia's office of the chief economist Dec. 20 said in the Resources and Energy Quarterly that world lithium demand in 2021 is expected to rise 60% year on year to 486,000 mt of lithium carbonate equivalent. The increases are forecast to continue in 2022 and 2023 to 575,000 mt and 724,000 mt, respectively.

Western Australia is planning to ease its strict border controls from the "locked-in" date of Feb. 5, which is based on projections of the state reaching a 90% double dose vaccination for eligible residents aged 12 years and above.

From that date, double-dosed vaccinated international and domestic arrivals to the state will not be required to quarantine.