The consequences of the Greenbushes expansion!

Paul Adams at DJ Carmichael recently wrote an interesting piece on the recent Talisons announcement regarding the Greenbushes announcement, see:

https://www.djcarmichael.com.au/blog/2017/3/20/lithium-production-super-charge

Greenbushes will increase from 80,000 tonnes to 160,000 tonnes of lithium carbonate equivalent (LCE).”

Paul Adams says:  

“… Greenbushes mine is arguably the world’s best hard-rock lithium deposit, with superior grade (2.4% Li2O) ...” and “[Greenbushes] … will be set to soak up much of the additional requirement for the following few years … [which] will leave the lithium market with excess supply through the early 2020’s, which would depress spodumene concentrate pricing and potentially significantly reduce margins for the highest cost concentrate producers.” and

“In other words, the supply response … will likely be enough to meet the demand in the medium term … [and after 2019] the picture becomes less clear as further new spodumene entrants, brine project expansions and the potential for the new hydro-metallurgical processing techniques (L-Max®, Si-leach®, and others) that have the potential to produce battery grade chemical product at a fraction of the price of the established processing route [i.e. spodumene], start to take effect.”

In other words I think he is saying that the highest cost producers, which is basically any spodumene producer with grades lower than Greenbushes, will be out in the cold as only the brine and mica projects will be able to compete. The brine projects are capex intensive chemistry sets, and there are only a few mica projects (LPD, LIT, EMH and some others).

What’s this mean for GXY, NMT/MIN, who are at least producing, for AJM, PLS and KDR who are yet to spend their big bucks on building their projects, and for the myriad of spodumene juniors who are still exploring !!!!