South Korean steel giant POSCO has signed a long term offtake agreement with ASX-listed lithium miner Pilbara Minerals and agreed to invest in its upcoming project in WA.
Under the agreements, POSCO will source an initial 80,000 tonnes per annum (tpa) of lithium concentrate from Pilbara's Pilgangoora Stage 2 project, eventually increasing this to 240,000 tpa.
POSCO will also invest $79.6 million in the Australian company, at 97 cents a share, to contribute to the development of a five million tonnes per annum Stage 2 project that Pilbara is developing.
The Australian miner has also agreed to take a 30 per cent stake in a planned 30,000 tonnes a year chemical conversion plant in South Korea.
"We are delighted to have secured a wide-ranging strategic relationship with a blue-chip partner such as POSCO, giving us a strong first-mover position in the rapidly growing North Asian lithium markets," Pilbara Minerals Chairman Tony Kiernan said.
Shares in Pilbara Minerals surged on the news, up 10 per cent at 91.5 cents at 1550 AEDT.
Lithium is a key ingredient used in electric batteries, and growth in the sector has been fuelled by the rise of the electric vehicles market.
Pilbara Minerals plans to start production of lithium concentrate in the second half of this year.
The company said the offtake agreement with POSCO will account for up to 30 per cent of its expanded production capacity once Stage 2 is completed. It has already signed up buyers for the rest of its capacity.