Australian Lithium Continues To Grow – Globe 24-7 speaks with Pilbara Minerals Ken Brinsden
Globe 24-7’s Stuart Darwin meets with Ken Brinsden, CEO of an emerging lithium and tantalum producer, Pilbara Minerals, to discuss Ken's thoughts on the recent DFS completion which supported the expansion of the Pilgangoora project and his outlook of the Lithium industry in Australia.
Pilbara Minerals is an emerging lithium and tantalum producer focused on the development of its world-class 100% owned Pilgangoora Lithium-Tantalum Project, located approximately 120kms from Port Hedland in the Pilbara region of Western Australia. It has been confirmed as one of the largest spodumene (lithium pyroxene) and tantalite projects in the world and has been developed into one of the world’s largest lithium mines, also producing tantalite as a valuable by-product.
Lithium has been on the radar for some time now - the supply/demand fundamentals for lithium put this highly sought-after metal in a league of its own compared with other commodities. Demand is predicted to grow at an annualised rate of more than 12 per cent, and this could be set to accelerate further as its widespread use in conventional industries such as ceramics, glass, batteries and pharmaceuticals gets overrun by growing consumption in rechargeable batteries for portable electronic devices, in batteries and electric motors for hybrid and electric cars.
Globe 24-7 is a Human Resources Consulting firm that specialises in talent acquisition and human resources solutions for the global mining industry. Globe has been in operation for fifteen years and has staff in 15 countries servicing small, mid-tier and large-scale mining companies through its project recruitment, search, HR consulting and HR Systems divisions.
Ken Brinsden, CEO of Pilbara Minerals, has had an extensive career profile working with companies including WMC Resources, Normandy, Central Norseman Gold Corporation and Iluka Resources. He is a mining engineer with more than 25 year’s experience in surface and underground mining operations, including roles in mine management, production and brown- & green-fields development roles across a range of commodities. Mr Brinsden joined Pilbara Minerals as Chief Executive Officer in January 2016 and was appointed Managing Director and CEO in May 2016.
Mr Brinsden has led the development of the Pilgangoora Lithium-Tantalum project, which has progressed from first drill hole to production in under four years. This exponential growth has resulted in Pilbara Minerals now being one of the world’s leading lithium raw materials players and listed within the ASX 200.
At the end of Q4 2018, Stuart Darwin met Ken Brinsden to discuss Mr. Brinsden’s outlook on the mining marketplace and his vision for Pilbara Minerals (ASX: PLS)
Firstly, Ken: I wanted to congratulate you and Pilbara Minerals on the recent DFS which supported the expansion of the Pilgangoora project. This must be an exciting time for the organisation. In your perception; what challenges will the Lithium industry face over the next few years?
It’s such a fascinating industry for what’s known and what’s not known. The application of lithium-ion battery technology is just continuing to grow and that sets up a question mark in people’s minds about how the demand comes on and how big it is or will be. I would say more broadly that the demand versus supply balance is a question on everyone’s lips and we certainly see that as we engage with investors, it feels like today there is a big disconnect between equity markets, lithium markets and the speed at which the lithium ion battery supply chain is growing. So out of all that, we are absolutely optimistic and feel we have an important part to play with the Pilgangoora project because of its scale, location and the quality of the products we have been able to produce; it is dynamic and constantly changing - we are ready for any foreseeable scenario.
How are your clients spread throughout the world? Will most of your clients be in China or is there a larger geographical spead?
That’s the case initially… China, almost uniquely, had access to the skills and technology for hard rock concentrate conversion or spodumene conversion to lithium salts but we see the broader development of a chemical conversion industry outside of China in Western Australia and soon to happen in Korea. We also see that as an important part of our future when building out the relationship with Posco and supporting the Korean lithium ion battery industry as well as the Chinese lithium industry. We are now shipping all the products from site; lithium concentrates and tantalite directly. We have built and commissioned the mine and we are in the process of ramping up the plant’s capacity. I am pleased to say it is all going well.
Where you would like to see innovation in your company? Where do you think industry needs it the most?
It’s such a dynamic and new industry… the hard rock supply base was uniquely served by one mine, the Greenbushes operation, and as the demand continues to grow for lithium ion batteries and specifically the raw materials & lithium hydroxide, you will see more and more investment in hard rock operations if you follow the supply chain, mining technology and processing technology. Ultimately those aspects contribute to a higher and higher quality; specifications are going to be what supports the battery industry and we think we have got a somewhat of a competitive advantage in a young company, energetic, passionate people, who are enthused about the opportunity we have in front of us through a really quality resource.
“We are very focused on innovation and already deploying amongst the hard rock industry and happy to do some more”.
How has financing in the mining industry changed over the last 5 years?
Financing is very challenging in lithium raw materials and that was our experience in financing our stage one project. It’s difficult because lithium raw materials are still perceived to be a boutique industry and somewhat opaque. Though that situation is changing, it still has not translated to the banks being open for financing lithium projects, and that has made life just a little bit more difficult for us.
When we think about how big the lithium industry needs to get over time, the pool of lithium raw materials needs to grow something like 4 to 5 times over the next 8 years. To achieve that, clearly financing will be needed, otherwise all the lithium resources are not going to grow. I would expect the financing outlook to continue to improve over time as the demand continues to grow for lithium materials the way we would expect them to.
Is it a challenge to find investors in the current market?
Not necessarily. The lithium world is really not too different to the broader natural resources’ world, in that if you have a quality resource and you are in the right location and you have scale, then I would argue investors are going to be there. I feel this has been the case for Pilbara Minerals.
If you break this down further into how people view the market in the short term versus the medium and long term, I think the trend is really clear in the medium and long term. There has to be a material growth in available lithium and that, by implication, means there has to be an incentive price which should in turn attract investment. I guess the question in the short term is how quickly that demand comes on and relatively speaking, what the available supply is. That has probably spooked the market during the course of 2018; it has been a question on everyone’s lips and it has impacted equites in the lithium sphere.
Similar to most companies, our share prices come off its highs and for some companies it has been really detrimental, but it feels like that is disconnected now from the demand growth that we see downstream. Obviously, we are intimately involved with customers and can see the moves being made downstream to grow the lithium mine supply chain. It feels like the pace of that change is disconnected from where the equities are at today… only time will tell.
“What do you think are the greatest challenges we face in the mining industry?”
Mining is not immune to disruption and you could rightly argue that it has been happening forever and a day in the industry - as such, you must ensure that your business is ready for change, innovative and able to respond quickly to manage not just survival but changing customer demands and growth.
“Switching to an HR perspective, the baby boomers are retiring and behind them is a generational gap in our mining workforce – are you feeling any effects of this changing demographic in the industry? If so what type of talent is the most challenging for you to acquire?”
Through my exposure to the industry and participation in the western Australian school of mines alumni, I am aware that enrolments in the mining disciplines and mining engineering are falling off a cliff. That is of real concern and is being addressed by the education institutions and industry as a matter of urgency. We just haven’t done a good enough job of demonstrating to students the rewards that come through working in mining, the innovation and ultimately what can be such an exciting career.
See more news from Pilbara Minerals on their website at: http://www.pilbaraminerals.com.au/
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Stuart Darwin – Business Development Executive