Pilbara Minerals and Ganfeng Lithium consider a lithium chemical plant JV for IRA benefits

As announced on 25 March, Pilbara Minerals and Ganfeng Lithium signed a binding term sheet to explore the feasibility of establishing a downstream lithium conversion facility. The proposed plant aims to produce approximately 32,000 tonnes of lithium carbonate equivalent (LCE) chemicals per year, enhancing both companies’ positions in the global lithium market.

The feasibility study is expected to be completed by the March Quarter of 2025, paving the way for a potential final investment decision and the establishment of a joint venture. The agreement envisions a 50:50 joint venture ownership.

The location of the plant is still pending, which leaves questions of whether this proposed plant is qualified for getting the benefits from the U.S. Inflation Reduction Act (IRA), or it will be considered as going against the narrative of "de-risking" China dominant lithium supply chain. The announcement did mention the potential plan to satisfy the IRA standards, stating that “for a period of 5 years after commissioning of the lithium chemical facility, and to the extent required to satisfy Inflation Reduction Act compliance, Ganfeng will sell down its JV interest at fair market value or implement some other ownership structure to secure favourable IRA benefits for the JV.”

This plan suggests that Ganfeng is also attempting to secure a steady raw material supply and a diversified global production facing the increasing uncertainties in terms of both economics and geopolitics. The proposed JV, if successful, will shed lights on how Chinese lithium chemical producers might build global partnerships in the future.