* Pilbara withdraws mine stake sale amid poor lithium market
* Miner cuts Sept qtr sales forecast to 20,000-35,000 T
* Pilbara retains sales forecast of 65,000-80,000 T for Dec qtr
(Recasts, adds analyst comment, context)
By Melanie Burton
MELBOURNE, Aug 27 (Reuters) - Pilbara Minerals Ltd PLS.AX on Tuesday took a stake in its Australian lithium mine off the market, cut its sales forecast and curbed spending plans amid a downturn in the market for the battery raw material.
The Western Australian miner had been looking for a partner to help it fund an expansion of its Pilgangoora lithium project in the northwestern Pilbara region in Western Australia in return for a 20%-49% stake in the mine.
"The Pilbara Minerals Board does not believe the proposals received to date represent an appropriate valuation for substantial ownership of one of Australia's premier, long-life lithium projects, particularly in light of current market conditions," it said in a statement to the exchange.
The company also cut back sales guidance for the September 2019 quarter to 20,000-35,000 tonnes of lithium concentrate spodumene, down from previous guidance of 35,000-48,000 tonnes, due to customer demand. It kept sales guidance of 65,000-80,000 tonnes for the December quarter.
It also slowed its plans for expansion that would have added 100,000 tonnes a year to production.
The moves reflect persistent weakness in lithium's end market, as China's sales of electric vehicles fall and chemical converters are slow to ramp up following sweeping changes to subsidies.
"After June a lot of producers sold and shipped much less than they produced so you've got meaningful stockpiles in Australia in addition to whatever there might be in China," said Canaccord's Reg Spencer in Sydney. "This isn't a sellers' market."
Overall new-energy vehicle sales in China rose 49.6% in the first six months of this year from a year earlier, but sales fell 4.7% in July, the first drop in more than two years, as China cut subsidies from July. a separate statement, Pilbara also said it had signed binding term sheet with POSCO 005490.KS to form a joint venture in South Korea to develop and operate a lithium hydroxide and carbonate chemical conversion facility that it first flagged in March. will initially hold a 21% interest in the venture with an option to increase to 30%. An existing offtake agreement for spodumene concentrate, a key mineral for electric vehicles, will be assigned to the JV.
The miner said on Tuesday the initial 21% investment will be largely funded through a previously announced A$79.6 million ($53.8 million) convertible bond agreement with POSCO.
Board approvals from both parties for the agreement are expected in the December quarter of 2019.
($1 = 1.4806 Australian dollars)