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Lithium heats up with huge profits for Pilbara Minerals

Wednesday, August 24th, 2022

Lithium heats up with huge profits for Pilbara Minerals
Pilgangoora lithium-tantalum project. Image: Pilbara Minerals

In what may be further validation for lithium’s future, Pilbara Minerals has posted its first-ever full-year profit.

The news follows a US law designed to drive electric vehicle (EV) production that will be a boon for Australian lithium producers.

Pilbara reported a full-year after-tax profit of $561.8 million for the 2021–22 financial year (FY22), which came off the back of a 577 per cent increase in sales revenue in FY22 to approximately $1.2 billion, up from $175.8 million in FY21.

“FY22 has been an incredible year for Pilbara Minerals, with our Pilgangoora operation capitalising on the surging demand for lithium raw materials that we have experienced over the course of the year,” Pilbara Minerals managing director and chief executive officer Dale Henderson said.

“The restart of the Ngungaju plant during the year, together with capacity improvements at the Pilgan plant enabled increased production volumes to sell into this strong pricing environment.

“The combination of strong operational performance and the significant increase in lithium pricing underpinned a robust inaugural profit result and has transformed the company’s balance sheet from the prior year.”

Elsewhere, Australian investors have recently “flocked” to lithium mining stocks, with mining companies like Lake Resources, Core Lithium, Sayona Mining and Liontown Resources, as well as Pilbara Minerals, all seeing recent share price increases.

In addition, the new US law is expected to be further a boost for Australian lithium producers.

Under the Inflation Reduction Act, a new EV will only be eligible for tax credits when at least 40 per cent of the battery’s critical minerals came from the US, a free trade agreement partner such as Australia, Chile or Canada, or recycling in North America. That could increase to 80 per cent by 2027.

“Australian mining needs about $20 billion per year to sustain current production,” Minerals Council of Australia chief executive Tania Constable of the new US law.

“If we are going to increase the capacity of existing mines, or open new mines – including in the commodities needed for our global transition to net zero emissions – capital investment will need to be increased by an order of magnitude.

“The Bank of America estimates that $US150 billion per year will be needed in global mining to produce the minerals needed to achieve the global transition to net zero.

“Australia needs to position itself as a competitive destination for this capital in order to realise its full potential.”

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