Pilbara Minerals CEO Dale Henderson has voiced caution regarding the implementation of a lithium price floor, suggesting it could have “bad, unintended consequences” if not carefully designed. Henderson emphasised that the government’s priority should be supporting critical minerals producers through shared infrastructure initiatives. Pilbara Minerals is an Australian lithium company focused on spodumene concentrate production. It explores, develops, and operates mineral resources in Western Australia.
While not necessarily opposed to using taxpayer funds to create minimum prices for critical minerals, an idea publicly considered by Resources Minister Madeleine King as part of a strategic reserve plan, Henderson stressed the importance of meticulous design. He acknowledged the potential positives of a well-implemented price floor but cautioned that poor execution could lead to adverse outcomes. These comments follow reports that some lithium miners are concerned a price floor could distort markets and prolong the viability of less competitive producers.
The concerns expressed by established lithium miners raise questions about whether lithium will be included in the initial phase of the strategic reserve policy. The reserve is expected to initially focus on price floors for Australian rare earths projects, which are characterised by companies focused on funding and building future projects, rather than current, established producers. Henderson also lauded the recent $13 billion deal between Prime Minister Anthony Albanese and US President Donald Trump as “incredibly encouraging”.
Pilbara Minerals’ cash balance stood at $852 million on September 30, a $122 million decrease over the past three months, and a continuing trend over the last nine quarters from $3.33 billion at June 30, 2023. This decline is attributed to spending on expansion projects, future tax payments, dividends, and lower income due to weaker spodumene concentrate prices. On October 23, spodumene concentrate was priced at $US865 a tonne, according to S&P Global Platts, a significant drop from its peak of $US8000 in early 2023.
