Pilbara Minerals entered a sales agreement for 15,000t spodumene concentrate with a mineral converter, with prices linked to lithium hydroxide equivalent pricing. 

On 20th February, Pilbara Minerals (Pilbara) announced it has signed a sales agreement with a mineral converter for 15,000tpy spodumene. The price of the concentrate shipment however will be determined using the lithium hydroxide equivalent price with a tolling fee deduced, as opposed to the spot market BMX platform or short-term contract as has been the case with previous shipments. While the toll arrangement price is a first for Pilbara, the concept is not new to the lithium industry with Mineral Resources and Ganfeng Lithium signing a toll agreement for spodumene concentrates to produce lithium hydroxide in February 2022. 

While Pilbara has reported the toll agreement was in response to a ‘strong offer’ from the counter party, the agreement may also provide better price resilience if lithium hydroxide prices fall by a smaller margin on a contained lithium basis than spodumene concentrate. It is unlikely that Pilbara will abandon the BMX platform for spot sales of spodumene concentrates, though in the future toll arrangements could become more prevalent if lithium hydroxide prices continue to be priced higher on a contained lithium basis.