Pilbara reaps rewards from decarbonisation

Australia's leading lithium producer Pilbara Minerals is focused on decarbonisation and benefits will soon flow back to shareholders.

"It's all coming together at the perfect time," CEO Dale Henderson said on an investor call on Friday.

"What an amazing quarter we've had."

Shares in Pilbara surged 10.2 per cent or 41 cents to $4.43 as the top performing stock on the ASX in early afternoon trade.

Mr Henderson said there was a structural change under way as the United States and Europe ramp up electric vehicles and accelerate economy-wide cuts to greenhouse gas emissions.

The recent Australian government endorsement of Pilbara's critical minerals project with a $250 million 10-year debt facility would support the business in the long-term on the global market, he said.

Not simply meeting rising world demand for critical materials, the miner is also pushing ahead with its own decarbonisation and sustainability credentials.

A six-megawatt solar farm, which is the first major step to decarbonising the Pilgangoora Project 120km from Port Hedland in Western Australia, began generating and supplying power during the last quarter.

The solar farm is expected to displace about 3.8 million litres of diesel fuel annually, saving an estimated 9900 tonnes a year of carbon emissions.

Pilbara Minerals confirmed the first ever dividend will be paid to shareholders this year and signalled additional "special dividends" to distribute excess capital.

The company will update guidance for fiscal 2023 when it releases half-year results in late February, and said it planned to update reserves in August.

There was an "active discussion internally" about bringing forward the initial dividend to February from August, Mr Henderson said when quizzed by analysts.

Chief financial officer Brian Lynn said the December quarter was an "absolute cracker" with a strong operating margin supporting an $815 million increase in the cash balance to $2.2 billion.

He said operating costs continued to be elevated and are still being impacted by labour shortages and supply chain shortages.

"There is this general inflationary pressure being experienced," he added.

Mr Henderson said it also makes sense to extract greater value along the battery mineral value chain.

Local technology company Calix signed a joint venture deal in November for low-carbon lithium refining that will also minimise waste.

They expect it to produce a superior product that will attract a premium price, as well as swapping out hydrocarbons for green energy.

The demonstration plant is electrically fired in contrast to conventional coal or gas-fired kilns.

"It has the potential to change the future of our business and that of the industry," Mr Henderson told the webcast.

He said Pilbara is focused on decarbonisation and benefits will flow back to shareholders.

"No other operator is taking this head on," he said.

Capital will be invested in expansion in Australia, although he said North American acquisitions could be attractive in the future.

He said the company would also consider building its own lithium chemical plant to move up the battery mineral value chain.

"It's absolutely moved from a China story to a global story," he said.

Australia produces nearly half the world's lithium, but China retains the stranglehold on purified materials needed by the world's manufacturers.