PLS Signs 20-Year Power Supply Deal With Fortescue

what happened

According to Dow Jones Newswires, Australian lithium miner PLS Group has agreed a 20-year contract to buy electricity from Fortescue. The company expects the deal to lower its power expenses and emissions.

Under the terms, Fortescue will supply at least 325 gigawatt-hours of electricity a year to the Pilgangoora operation in Western Australia. PLS recently said it would go ahead with the P2000 project, which aims to expand output of spodumene concentrate at the mine.

PLS Chief Executive Dale Henderson said cheaper, lower-emissions power will further improve the economics of the P2000 expansion beyond earlier estimates and leave room for future growth. Fortescue Chief Executive Dino Otranto said PLS is the first customer of Fortescue's green grid in the Pilbara region.

why it matters

For the lithium market, the key point is lower operating costs: PLS expects unit costs to fall by A$15 to A$20 a tonne compared with the announced 10-year average for P2000. The deal covers a single large producer, so its broader market impact is limited.

market impact

Lithium: lower PLS operating costs at Pilgangoora modestly support the company's margins

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