Piedmont Lithium (NASDAQ:PLL) Inc (ASX:PLL, NASDAQ:PLL, XETRA:) has welcomed the results of its definitive feasibility study (DFS) for a 30,000-metric-ton-per-year lithium hydroxide plant at the Tennessee Lithium Project in McMinn County, Tennessee.
American-based lithium business
The company says the study, which features waste-reducing Metso:Outotec conversion technology, confirms the potential to develop an American-based lithium hydroxide business using spodumene concentrate from market sources, including via existing offtake agreements with Sayona Quebec and Atlantic Lithium.
The study demonstrates robust project economics, including the positive impacts of the Biden administration’s Inflation Reduction Act, which supports electric vehicle (EV) innovation, with highlights including:
an estimated after-tax NPV (8% discount rate) of US$2.5 billion and an after-tax IRR of 32%; and
an average annual steady state EBITDA and after-tax cash flow increase to US$376 and US$317 million, respectively.
The study assumes fixed prices of US$26,000 per metric ton of lithium hydroxide and US$1,600 per metric ton of spodumene concentrate over the project's 30-year life.
Tax credit from Inflation Reduction Act
The model includes a Section 45X production tax credit of 10% under the Inflation Reduction Act of 2022 and assumes a credit of US$141.7 million against project capital costs based on expected receipt of a US Department of Energy grant.
The Metso:Outotec technology provides an improved sustainability profile over conventional conversion.
What’s more, the site is poised for development, with infrastructure, workforce, customer proximity, and cooperative government, and is zoned for industrial use, reducing number of permits and approvals required to commence construction.
PLL will benefit from the availability of low-cost, clean, reliable energy because of the Tennessee Valley Authority's aspirations to reach net-zero by 2050 through a combination of wind, solar, hydro and nuclear and other low-carbon resources.
The development of the Tennessee Lithium Project remains subject to, among other things, receipt of material permits and arrangement of project financing, but construction is targeted for 2024.
Domestic battery minerals production
Piedmont president and CEO Keith Phillips, said he was pleased with the project economics and the positive impact of the Inflation Reduction Act, which strongly favours domestic battery and critical minerals production.
"America's pro-EV and battery manufacturing policies are providing an advantage to Piedmont at a time when many analysts are projecting lithium shortages to continue into the 2030s,” Phillips said.
“Piedmont's selection for a $141.7 million grant last year by the US Department of Energy exemplifies America's commitment to developing a domestic lithium supply chain.
"Tennessee Lithium is positioned to be a key resource for EV and battery manufacturers. Through long-term supply agreements with our partners, we can source raw material from spodumene that we own or in which we have an economic interest, providing greater control of our feedstock while capturing the economics of integrated production.
“We can advance development of the operation with revenues anticipated from the restart of North American Lithium and our recent offtake agreements with Tesla (NASDAQ:TSLA) and LG Chem.
“Further, with the Metso:Outotec flowsheet, we believe we can sustainably produce critical lithium materials on a cost-effective basis for a more responsible profile compared to producers utilising sulfuric acid roasting."
Next steps
The company is focused on first commercial shipments in Q3 from North American Lithium with revenue generation to support activities across Piedmont's global portfolio of projects, including Tennessee Lithium.
A DFS is expected mid-2023 for the Ewoyaa Lithium Project in Ghana, which is expected to be the primary feedstock for Tennessee Lithium, while Carolina Lithium continues to advance through permitting and approvals processes.