Australian spodumene concentrate producer Pilbara Minerals announced on Monday a new commercial model to sell its unallocated tonnes, in addition to its BMX auctions and spot sales, Kallanish reports.

The company sold 15,000 tonnes of spodumene concentrate linked to future hydroxide chemical pricing to an unnamed chemical converter. The new sale alternative is based on lithium hydroxide tolling, which means Pilbara will receive the value of lithium hydroxide price for the product sold less an agreed amount for conversion and other costs.

Up until now, Pilbara used to sell its uncontracted spodumene concentrate volumes through short-dated offtake and spot sales through the BMX platform. The company says the new pricing methodology “has the potential to be highly favourable,” and foresees future tolling arrangements.

Some market observers believe the move stems from Pilbara trying to protect itself from declining lithium prices in China, which are likely to have shown in its BMX auction.

The miner says it decided to abort the planned auction after receiving “the strong offer from the chemical converter.” It claims that based on today’s pricing for lithium hydroxide, pricing for the cargo would be aligned with previous spot sales including those achieved on the BMX platform.

Yet, the actual price for the cargo, to be delivered in the March quarter, will be calculated using future lithium hydroxide pricing at the time of conversion. At this point, it remains unclear whether the move will prove to be favourable to the company.

In its last auction, in December 2022, Pilbara yielded a price of $7,552 per dry metric tonne for SC5.5, fob Port Hedland. That was equivalent to $8,299/dmt for SC6.0, cif China, the company said then.

Pilbara’s shares were down 5.41% at AUD 4.20 ($2.90) at the time of writing – a possible effect of its first hydroxide tolling-based sale, or of concerns that CATL may be discounting its battery prices in China. The latter pressured major lithium companies’ stocks late last week, including SQM, Livent and Albemarle.

SQM’s stock fell 9.81% on Friday, prompting the Santiago Stock Exchange to query the company on any special circumstances or relevant events driving the decline.