Pilbara Minerals upgrades to million-plus tonnes a year

The lithium industry must find more sustainable methods, Pilbara Minerals CEO Dale Henderson says. (Marion Rae/AAP PHOTOS)

Lithium leader Pilbara Minerals says it can produce more than one million tonnes a year after a significant upgrade at its flagship project.

Updating peers at an industry forum, CEO Dale Henderson on Monday announced a 109 million tonne increase to the resource at its wholly-owned Pilgangoora operation in the Pilbara region of Western Australia.

Pilbara expects to be the second-largest hard rock lithium mine in the world, with a installed production capacity of more than a million tonnes a year, when the infrastructure upgrade known as the P1000 expansion is complete.

The boost of more than a third (36 per cent) in the project's resource comes as drilling continues to further increase future tonnage, mostly bound for North Asia.

Shares in ASX top 50 company Pilbara rose 20 cents or four per cent to $5.19 in afternoon trade.

Pilbara had a view from its inception to do more than "dig and ship" rock, including a joint venture with South Korean metals and processing giant POSCO that includes a stake in a 43,000 tonnes per annum lithium hydroxide facility at Gwangyang.

The company is also moving mid-stream through a joint venture with processing technology company Calix, with a demonstration kiln to produce a higher-value lithium salt.

But the lithium industry must find more sustainable methods, Mr Henderson told the Diggers and Dealers Mining Forum.

Pilbara Minerals was having a "red hot crack", he said.

That includes a step down in carbon intensity and waste, so that what heads out the gate of the demonstration plant is high-grade lithium salt.

Nor is he keen to join the United States-led lane in the race for energy transition minerals to break China's stranglehold.

"I think any kind of shutting off of supply chains is highly unlikely," he told reporters. 

"In the near term, certainly in the next couple of years, the supply chain will remain Asia-centric.

"It doesn't have to be either or."

While China dominates every aspect of the battery mineral supply chain, including factory-ready supplies, Australia is the world's top source of lithium.

Pilbara is moving nearer to the lithium resource ranking of Greenbushes in the state's south-west.

Mr Henderson said demand for Pilbara's lithium was likely to grow by 12 to 20 times current Pilangoora production by 2040. 

He said the future offered a "runway of value-adding" as Australia and other advanced economies seek to develop a sovereign battery supply chain.

"We've even paid our first tax - that's a bit of a milestone," he said.

"We've always taken the view that the best thing we can do is to make the most of the incredible asset we've got."

The resource update was evidence of "getting on with the job" and supporting Pilbara's long-term bet on pricing and demand.

"That's going to be a key struggle for groups considering buying assets or investing on the ground, because that's the biggest determinant of valuation," Mr Henderson said.

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