Australian lithium miner Pilbara Minerals (PLS) this morning announced a lithium-export deal with Korean industrial conglomerate POSCO.
It’s part of a strategic partnership for POSCO to secure a long-term lithium supply source, as it seeks to gain a bigger slice of the battery materials in the Asian region.
POSCO will also make an immediate $79.6 million equity investment in PLS, giving it a 4.75% stake in the company.
Investors have reacted positively to the deal, and a short time ago Pilbara stock was up more than 13% in midday trade:
The contract will allow POSCO to import an initial 80,000 tonnes of lithium concentrate per year.
That will increase to as much as 240,000 tonnes per year, upon completion of a lithium processing facility in South Korea.
The processing facility will be built as a joint venture between the two companies — with PLS’ 30% share funded by an additional $79.6 million in debt finance from POSCO.
POSCO is listed on the South Korean stock exchange and has a market capitalisation of more than $US29 billion.
Its operations span across the steel industry, engineering and construction, and battery minerals.
The agreement with POSCO is part of a broader trend, with Asian manufacturers looking to secure supply of raw lithium from Australian miners as part of efforts to supply the growing market in Asia for lithium-ion batteries.
Despite this morning’s surge in the stock price, Pilbara Minerals share are still more than 20% lower than their all time high of $1.22 reached in early January
NOW WATCH: Money & Markets videos
Business Insider Emails & Alerts
Site highlights each day to your inbox.