(Reuters) - Australia's Pilbara Minerals Ltd (AX:PLS) on Tuesday executed a binding terms sheet with POSCO (KS:005490) to form a joint venture (JV) in South Korea to develop and operate a lithium hydroxide and carbonate chemical conversion facility.
Lithium producer Pilbara 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 agreement comes after Pilbara in March exercised an option to manufacture battery-making materials with steel-maker POSCO by setting up a lithium processing plant in South Korea.
The miner said on Tuesday the initial 21% investment will be largely funded through a previously announced A$79.6 million (43.8 million pounds) convertible bond agreement with POSCO.
Board approvals from both parties for the agreement are expected in the December quarter of 2019.
Australian lithium producers are facing weak market conditions for the key battery ingredient amid a change in electric vehicles subsidy policy in China and festering global trade tensions.
On Monday, lithium miner Alita Resources Ltd (AX:A40) said it was in talks with multiple parties, including in South Korea and Japan, for prospective new supply deals after a key Chinese customer reported financial troubles.
In a separate statement, Pilbara said it has decided not to pursue a minority sale process for its Pilgangoora lithium-tantalum project in Western Australia.