Australian lithium developer Pilbara Minerals Ltd. has taken another major step toward financing and development of its 100% owned Pilgangoora Lithium Tantalum project, located near Port Hedland in Western Australia, after signing a second off-take agreement with a Chinese lithium group for the early supply of direct shipping ore (DSO).

The off-take agreement with Shandong Ruifu provides for the delivery of crushed, but unprocessed ROM ore from either the Pilgangoora project or, at Pilbara’s election, the adjoining higher grade Lynas Find Lithium project (upon completion of its acquisition by the company), from as early as July 2017. This will provide significant revenues during project construction and ramp-up phase and paves the way for a further off-take agreement with Shandong Ruifu for spodumene concentrate, which is currently being finalized.

Under the agreement, Pilbara will supply a total of 1.9 million metric tons (mt) of unprocessed ROM product with a specification of 1.5% Li2O and 5% moisture level (shipment rejection below 1.4% Li2O) at a rate of approximately 100,000 mt/month until December 2018.

Under the agreement, the ROM product will be shipped to Shandong Ruifu’s existing local port facility on the eastern seaboard of China, where it proposes to carry out relatively minor modifications to an existing processing plant to concentrate the run-of-mine ore delivered by Pilbara from the middle of next year.

The ROM off-take agreement is subject to regulatory approvals in China; Pilbara securing access to the bulk export facilities in Port Hedland (being Utah Point) for the nominated capacity and the obtaining of authorizations for shipment of the ROM product; Shandong Ruifu is an established lithium carbonate producer in China, based in Tai’an City, Shandong Province, in the country’s eastern seaboard. Shandong Ruifu commenced lithium carbonate production in October 2013, with a nominal capacity of 5,000 mt/y and completed expansion in 2015 to 8,000 mt/y. In April, it commenced further expansion of a new 20,000-mt/y-lithium carbonate plant in the same location.

In addition, Shandong Ruifu plans to add another 10,000 mt/y of lithium hydroxide capacity adjacent to its existing facilities, which is about to commence construction in November at the same location. At full capacity, Ruifu is expected to produce 38,000 mt/y of lithium products requiring around 300,000 mt/y of spodumene concentrate.