Momentum builds for Piedmont Lithium, despite North Carolina hiccups

Piedmont Lithium (NASDAQ: PLL; ASX: PLL) took centre stage in the junior lithium space in 2020, when its stock surged almost 84% in a day’s trading in Sydney after it confirmed it had signed a sales agreement with Tesla to supply the electric vehicle maker with high-purity spodumene concentrate for up to 10 years.

The Australian company, since redomiciled to the U.S., aims to become one of the world’s lowest cost producers of lithium hydroxide, and says it is the most strategically located to serve the fast-growing North American electric vehicle supply chain, with operations already established in the U.S. and Canada. 

Emboldened by the U.S. Inflation Reduction Act, Austin Devaney, Piedmont Lithium EVP and chief commercial officer told The Northern Miner‘s sister website MINING.com in an interview that North America’s policy pivot embracing the energy transition amounts to the biggest investment push in terms of scale for a century.

“Piedmont has a lot of activities, but really the focus is developing an industry that really hasn’t taken place here, probably since the steel industry 100 years ago, when you think about the scale and size of the battery supply chain,” Devaney said.

“It’s exciting… we’ve developed a lot of momentum in this month,” Devaney said, noting the company will be shipping product on a monthly basis now that commercial shipments from its 25%-owned North American Lithium project in Quebec have begun.

Piedmont this month announced the U.S. government granted its permits to construct a lithium hydroxide plant in Tennessee, after receiving its air permit in July. 

The now US$800-million project 265 km southeast of Nashville would process about 27,000 tonnes a year of the battery metal starting in 2026.  The cost, however, has increased by a third.

“That was really the final permit in order to begin construction, though we need to conclude all of our funding activities. We’re working with partners now,” Devaney said.

“A lot of that was really just inflationary pressures that we had seen over the course – and a better defined scope and better definition of cost took us to that point.”

The prefeasibility study, the executive noted, was done in January of 2022, or 16 months before the definitive feasibility study was released.

The plant would more than triple lithium processing in the U.S. as junior miners enter the lithium market to establish domestic supply and reduce reliance on China for metal processing.

“Piedmont’s focus is building lithium hydroxide capacity. Our North Carolina and Tennessee facilities would fill that gap,” Devaney said.

The company also completed a 22.5% earn-in on Atlantic Lithium’s (ASX: A11) flagship Ewoyaa project in Ghana this week. It can earn up to a 50% stake.

North Carolina permitting

Piedmont’s North Carolina project is in the Carolina tin-spodumene belt and along trend to the Hallman Beam and Kings Mountain mines, historically providing most of the western world’s lithium from the 1950s through the 1980s. 

The open-pit mine, if approved, would be one of the few lithium-producing sites in the United States, but there has been slow progress in gaining approvals for the project, which the company has been trying to get up and running since 2018.

In November 2020, Piedmont received its construction air permit, and permit for operations.

“The North Carolina facility is a completely integrated facility to produce lithium hydroxide,” Devaney said. “The mining site is part of our mining permit, we have both the mining [and] concentration activities. 

The company plans to remove some of the byproducts, sell those, increasing the concentration of spodumene or lithium oxide in the material and then build a chemical plant – all on the same property.

“Our ownership position in Gaston County is a combination of owned, leased and optioned land with the great majority of it owned land,” Devaney said. 

Piedmont had planned to start building next year, but local opposition and a lengthy permit process will delay construction to at least 2025 and production to 2027.

In its quest to build one of the largest lithium mines in the U.S., Piedmont overlooked a crucial constituency: its North Carolina neighbours.

In an early August public meeting with the Gaston County Board of Commissioners, which controls zoning changes, officials were irked that CEO Keith Phillips did not attend and concerned that the 152-metre-deep mine could cause wells in the area, which many residents rely on, to run dry.

“We still have a number of hurdles for the North Carolina facility,” Devaney said. “We’ve spent almost two years now, with our application for our state mining permit in August 2021.

“They’ve asked questions along the way. We’ve had a great relationship with the state in working to receive a mining permit. We think we’re progressing towards the end of that but you never have a clear indication of when you will receive that mining permit.

“We’ve been working with the county to understand both what that takes and how we will proceed through that process. The county’s been good to work with. It’s a big project, there are a lot of people who have a lot of interest in what we’re doing.”

Devaney said the company is investing over a billion dollars in North Carolina at that facility and will employ 400 people when it becomes operational. 

“Our target today is 2027, but it’s contingent on receiving a mining permit and then rezoning at the county level. And those are activities that while you can estimate when you’ll receive them, you don’t know until you know.” 

Quebec facility to supply Tesla 

Piedmont’s deal to supply lithium to Tesla in 2020 from North Carolina was paused before being renegotiated in January after the company found a temporary source for the metal from a Quebec lithium mine in which it has an investment. 

Sayona Mining (ASX: SYA) made the first commercial shipment of lithium-bearing concentrate from the North American Lithium project in Quebec, operated by Sayona Mining Quebec, jointly owned by Sayona (75%) and Piedmont Lithium (25%) on Aug. 1.

The first concentrate from Quebec shipped to international markets, to be sold through a global trading company. Piedmont’s access to that Quebec supply is expected to end by 2026.

“There are only very few places that process spodumene,” Devaney pointed out. “There are a couple of facilities in Australia – then everything else is in China.

“Consummating the initial agreement we had in 2020, which was to supply spot from our North Carolina facility, we have since transitioned that to supplying product from our Quebec facility.”

Tesla is currently working on building a lithium conversion facility in Texas, which is where the product will be destined.

“The Inflation Reduction Act has been superb in both bringing a lot of attention to the space and what the United States and North America needs to do to become less reliant on foreign sources of material.” 

Looking forward, Devaney is optimistic, despite bumps along the road to production. 

“Going from a pre-revenue company to a revenue producing company is exciting for all of our employees. We have almost 60 employees today. When I joined, (in 2020) we had four.”