Why wont SKI buy in now?, page-35

pc3 - a couple of things

Its not clear yet whether "SK need ALL the Ni and Co that Sconi can give up"

We need to see the 'expanded and amended' long form contract documents to be able to guage that.

For example, the current term sheet is only for a guaranteed 7 years of supply - which includes a 2 year ramp up. So at this stage, SKI is saying it only needs 60KT Ni and 12KT Co for 5 yrs plus whatever can be produced in yrs 1 and 2. SKI is hedging its requirements beyond the first 7 years by electing just an option for a further 6 years.

SKI is at the forefront of developing lower Co batteries (NCM811) and no doubt will also be looking at other technologies. The term sheet suggests a definite high need for both Ni and Co until 2027, but not beyond that. So SKI is sensibly keeping its options open.

The questions investors need to ask are 'does the BFS - draft and optimized stack up if Co is not in high demand after the first 5 years of ramped up production'? and, if this happens, 'will the price of Ni go up sufficiently to offset any price decline in Co'? I don't know the answers to these questions but they are important considerations.

You also say that "SK do not have the luxury "in my opinion" of starting back down the path of searching for a new off take partner for Ni and Co"

SKI, of course, already have an off-take partner as they are producing batteries for Kia, Hyundai and BAIC. We cannot know what discussions are occurring with that partner in the background.