A West Australian mining company will spend more than $1 billion on an expansion in the state's north-west despite falling prices for the commodity.
In a statement to the Australian Stock Exchange (ASX), PLS Group Limited announced it would push ahead with plans to increase spodumene concentrate production to about 2 million tonnes per annum at its Pilgangoora lithium mine, 140 kilometres south-east of Port Hedland.
The company is investing $1.9 billion in the project, which will include building a new processing facility named Jimmagunya by Nyamal elders, meaning spring country.
The PLS Pilgangoora site in WA will expand. (Supplied)
PLS managing director and CEO Dale Henderson said in the statement he was determined to ensure the company was competitive in the lithium market.
"Pilgangoora has grown significantly over the past decade and as we look ahead, we are continuing to invest in the infrastructure needed to support the long-term potential of this world-class asset," he said.
"These [changes] are expected to reduce operating costs, improve productivity, and strengthen the existing operation while also providing the infrastructure capacity required to support the increased scale of P2000."
The company has also announced a $600 million infrastructure investment over three years.
That includes upgrading access roads, co-funded by the state government, building a new 1,200-bed permanent workers' village and a mine services facility.
Funding for both will be underpinned by the company's existing cash balance and operation cashflows from existing production.
The statement said lithium had been a strong growth market over the past decade, with forecasts for it to grow by 8 per cent per annum until 2040.
Demand high, while price low
If the company's predictions are correct, the expansion would make the PLS mine rival Talison's Greenbushes mine in WA's South West as Australia's largest hard rock lithium mine.
Talison Lithium operates the Greenbushes mine in the state's South West. (ABC South West WA: Jon Daly)
PLS predicts Pilgangoora will produce 2 million tonnes per year of spodumene concentrate when it is fully operational in 2029.
Mining analyst Peter Strachan said demand for lithium had been steadily growing, but costs were falling.
"Despite the fact that the demand for lithium is strong because of the strong electric vehicle demand globally, the price of spodumene concentrate has fallen,"
he said.
"The market for lithium miners in Australia has been quite weak on the back of this falling commodity price."
Lithium prices have now almost halved from their May highs of $US3,000 per tonne to $US1,505 per tonne for spodumene and about $US15,500 per tonne for lithium carbonate.
Peter Strachan says demand for lithium is high due to EVs. (Supplied: Peter Strachan)
"Mines which were closed two or three years ago when the price really fell are now coming back online," Mr Strachan said.
"It's a supply issue that's been pushing down the price of lithium."
Mr Strachan said Talison Lithium, which owns the Greenbushes mine, would likely rein in operations to reduce its own costs off the back of the announcement.
"They will scale back, they'll choose to do the lowest cost operation," he said.
State government backs expansion
The WA government has welcomed the news, saying the expansion would create 1,000 jobs during construction and a further 500 ongoing operational roles.
"This is exactly the kind of investment that keeps Western Australians in work today and creates the jobs of tomorrow," Premier Roger Cook said.
Pilbara Minister Amber-Jade Sanderson said the move was a vote of confidence in the region.
Amber-Jade Sanderson says there will be more opportunities for Pilbara workers. (ABC News: Benjamin Gubana)
"The creation of about 1,500 jobs will deliver real opportunities for Pilbara workers, local businesses, and communities while strengthening the region's position as a global critical minerals powerhouse," she said.
WA's lithium industry sold almost 4 million tonnes of spodumene concentrate in 2025, the highest volume on record.