The Pilbara Minerals Ltd (ASX: PLS) share price is a top S&P/ASX 200 Index (ASX: XJO) performer on Wednesday, up 4.57% to a record close of $2.06.
Shares in the lithium miner have been a tear in recent weeks, fueled by higher lithium prices and positive investor sentiment towards renewable technology.
What's driving the Pilbara Minerals share price?
Looming lithium shortage
Fastmarkets sees that increasing and sustained demand for lithium will strain the supply side through to 2030.
To add some perspective of exactly how much lithium the world might need, Fastmarkets reported:
"…a total of 345,000 tonnes of processed lithium was produced in 2020, dominated by resources from the lithium triangle and Australia. Lithium production must quadruple between 2020 and 2030 to meet growing demand, from 345,000 tonnes in 2020 to 2 million tonnes in 2030."
The increased demand for lithium has helped the Pilbara Minerals share price make a quick turnaround from multi-year lows in early 2020 to setting new record highs every week for the past 6 weeks.
Pilbara Minerals' inaugural lithium auction
Pilbara Minerals held its inaugural spodumene concentrate auction via its Battery Material Exchange platform on Thursday, 29 July.
Up for grabs was 10,000 dry metric tonnes (dmt) of spodumene concentrate.
The company was pleased to advise that it received 62 online bids from 17 independent buyers during the three-hour auction window.
The winning bid secured the 10,000 dmt at US$1,250/dmt free on board (FOB).
Back in June, Pilbara Minerals noted that spodumene concentrate prices were varying between approximately US$700 to US$975/dmt.
The narrative of surging lithium prices bodes well for the strong performance of the Pilbara Minerals share price.
Expansion towards 1 million tonnes per annum
Another factor supporting the Pilbara Minerals share price could be its aspirational goal of reaching 1 million tonnes per annum (tpa) of spodumene concentrate production.
In the near term, the company believes it can increase its production up to 580,000 tpa by mid-2022.
Driving the growth in lithium production will be the restart of its Ngungaju processing plant in Western Australia.
The plant, formerly owned by Altura Mining Limited (ASX: AJM), is expected to contribute approximately 180,000 to 200,000 dmt by mid-2022.
Pilbara Minerals share price snapshot
Pilbara Minerals has rallied 16.10% in the first few days of August and up 136.78% year-to-date.
In the last two years, the company has reported its full-year results in the last week of August.
