Piedmont’s Tennessee lithium hydroxide plant to double U.S. output

Piedmont Lithium (NASDAQ: PLL; ASX: PLL) says its proposed US$600-million lithium hydroxide plant in Tennessee would pay for itself in less than three years. 

The project has an after-tax net present value of US$2.5 billion at an 8% discount rate, an internal rate of return of 32% and a payback period of 2.8 years, according to a feasibility study released on Thursday. The study assumes fixed prices of US$26,000 per tonne of lithium hydroxide and US$1,600 per tonne of spodumene concentrate over the project’s 30-year life.

Located about 265 km southeast of Nashville, the proposed 30,000-tonne-a-year plant would double current lithium hydroxide production in the U.S. on its own. The project has pivoted to processing ore from Quebec, where the company owns a stake in Sayona Mining’s (ASX: SYA) operation, instead of from Piedmont’s delayed US$840 million open-pit project in North Carolina that has yet to secure all permits. 

“Tennessee Lithium is positioned to be a key resource for electric vehicle (EV) and battery manufacturers,” Piedmont president and CEO Keith Phillips said in a statement with the study. “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.”

The North Carolina-based company plans to start construction of the Tennessee plant next year if it secures permits and financing, it said. It will benefit from a US$141.7 million government grant under last year’s Inflation Reduction Act, which the feasibility study assumes in its model.

“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. 

While U.S. output of lithium for batteries is low at the moment, a Biden administration push for more production alongside similar policies in many Western countries is aimed at loosening China’s grip on processing the light metal. Canada alone has more than 400 mostly early-stage lithium projects, nearly half in the hard-rock hotspot east of James Bay in Quebec, and large brine projects in Alberta, such as E3 Lithium’s (TSXV: ETL) Bashaw at prefeasibility stage. 

On Thursday, another project in the U.S. was announced. Stardust Power, an unlisted company based in Greenwich, CT, said it planned to start building a plant next year in an unnamed central state to produce 50,000 tonnes annually using material from brine operations. 

Back at the Tennessee plant, Piedmont said it is arranging supplies from the Ewoyaa lithium project in Ghana, which it is developing with Atlantic Lithium (AIM: ALL; ASX: A11). A feasibility study is due on that project by the middle of this year, Piedmont said. 

The Tennessee project already has off-take agreements with automaker Tesla and LG Chem. Phillips says the project will save money and be more environmentally friendly than some other lithium processors. 

“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 utilizing sulphuric acid roasting,” he said.