Piedmont Lithium Slashes 2024 Capex Amid Lower Prices

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Researched by Industrial Info Resources (Sugar Land, Texas)--A downturn in lithium prices adversely impacted Piedmont Lithium's (NASDAQ:PLL) (Bessemer City, North Carolina) financial results for 2023, and the company expects between $10 million and $14 million in capital investment in 2024--down from $57 million in 2023. Still, Piedmont is maintaining its 25% joint-venture and offtake position with Sayona Mining Limited (Milton, Queensland) for the North American Lithium (NAL) operation in Quebec, and continues to develop lithium projects in Tennessee and North Carolina.

"In response to current lithium market conditions, our planned funding is significantly reduced from our 2023 funding levels," said Michael White, the chief financial officer of Piedmont, in an earnings-related conference call. "It's worth noting that our current 2024 outlook is subject to further changes in market conditions. The majority of our forecasted capital expenditures relate to Carolina Lithium and Tennessee Lithium."

In an earnings-related press release, Piedmont said the NAL operation, the company's only producing asset, delivered its first commercial shipment, approximately 20,500 metric tons of spodumene concentrate, in early August to a third party. NAL began operations last year after restarting in March.

"As the largest lithium operation in North America, NAL has been successfully ramping up production over the past 10 months, with production hitting record levels in December," the company said. In the fourth quarter, NAL produced 34,200 metric tons and shipped 23,900 metric tons, of which Piedmont purchased 14,200.

Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Project Database can click here to read a detailed report on the restart project, and here for additional capital projects related to NAL.

For more information on the NAL operation, see August 4, 2023, article - Canada Lithium Mine Begins Commercial Shipments.

Piedmont is maintaining its joint interest and offtake agreement in the NAL operation, despite agreeing to sell its shares in Sayona Mining (the company, not the joint interest in the asset) as Piedmont aims to maintain a strong balance sheet and minimize shareholder dilution.

On the company's earnings conference call, Piedmont Chief Operating Officer Patrick Brindle provided updates on the company's two wholly owned developments in the U.S.: in North Carolina and Tennessee. Brindle said Piedmont is seeking regulatory approval for the Carolina project, which entails building a 22.9 million-ton-per-year open-pit lithium mine and a lithium-hydroxide conversion plant. He added the Tennessee project already is permitted and designed for 30,000 tons of lithium hydroxide production.

Brindle said Piedmont has purchased a tailing storage facility next to the proposed Tennessee project site and has signed a purchase agreement to buy a large industrial site in Tennessee next door to the proposed operations, "which we could potentially use to reduce future project capex."

"Right now, we're kind of evaluating the timing of Tennessee Lithium against the backdrop of prevailing market conditions, financing opportunities, and progress on regulatory approvals at Carolina Lithium."

Subscribers can read more information on the Tennessee and Carolina projects.

Brindle also said the timing of those projects could also be impacted by the development progress of the Ewoyya lithium mine in Ghana, its joint venture with Atlantic Lithium (New South Wales, Australia). Piedmont expects the material permitting process will be complete in 2024, and the proposed 2 million-ton-per-year mine is expected to provide enough spodumene ore to produce 255,000 tons per year of spodumene concentrate over a 12.5-year mine life. Click here to read the Ewoyya mine project report. Piedmont has sold its shares in Atlantic Lithium, but its maintaining its joint-venture and offtake position in the project--just like the NAL operation.

Despite the ongoing development of Piedmont's assets, a downturn in lithium prices during the year and into 2024 affected the company's 2023 financial results. The company sold 14.2 million metric tons of spodumene concentrate in the fourth quarter, which led to a net loss of $18.1 million, compared with 29 million metric tons sold and $23.8 million in gross profit in the third quarter.

"Lithium prices have fallen sharply, and the market consensus is currently negative," said Keith Phillips, chief executive officer of Piedmont Lithium, in a February 6 corporate update press release. "As they say in the mining business, 'the solution to low prices is low prices,' and announcements of capacity curtailments and new project deferrals have recently become commonplace with more likely to come. At today's lithium prices and equity valuations, new project development is expected to be challenging for all, and if EV markets continue to grow, then another period of lithium shortages appears likely to follow."

For more information on the drop in lithium prices, see February 8, 2024, article - Oil Producers Continue to Track Lithium as Prices Slide.

Subscribers to Industrial Info's GMI Project and Plant databases can click here for a full list of detailed reports for projects mentioned in this article, and click here for a full list of related plant profiles.

Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).