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Understanding lithium demand, page-26

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eshmun

12,263 Posts.

3833

21/03/19

00:32

Post #: 37831801
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Originally posted by Scarpa ↑

As I suspected, NeoMetals has delayed the facility because of capital cost issues - predominantly. They are worried about short term movements in lithium prices given, IMO, the high cost nature of the Mt Marion mine and the hydroxide facility itself btw.
https://thewest.com.au/business/min...goorlie-lithium-refinery-study-ng-b881141214z

If you can't be profitable when spodumene prices are US$700 per tonne at the mine (where NeoMetals has a stake in Mt Marion is a key here too), you have a problem (so the oversupply issue is falling spodumene prices to an acceptable level still above historical averages) plus falling hydroxide prices (which are still over US$12,000 per tonne at this moment btw). And prices are expected to increase btw in the medium term - i.e stabilse now but from my own reading not go back to their highs. Obviously Albermale and Tianqi better defer their own hydroxide plants (which each are going to be three times the size of NeoMetals proposal given they are currently (Tianqi) or about to be in the construction stage (Albermale) as we speak) but it is likely Neoetals has issues with efficiency, grade and capex. As I said access to good quality spodumene is king as is low cost access to gas supply.

As to your second point here is the graph you are referring to I suspect in that PLS post -which I have copied from the PLS thread in that post of yours there.

So lets add the spod totals (even the forecast ones). I get about 2.1 million tonnes of chemical grade spodumene concentrate capacity in 2019, accepting all the yellow in the above btw.

Now lets look at the 2025 figures for passenger vehicles alone I have provided - I stated 550,000 LCE appears to be the estimate for the passenger vehicle EV market people are working with, as per the earlier post on the thread, which makes the spodumene need 4.125 million tonnes of 6% grade feedstock for that market. Now, lets add that other 200,000 LCE tonne in the other category which is the other in 2018- been 1.5 million tonnes - before even considering growth in this area. Total so far is 5.625 million tonnes of 6% grade spodumene equivalent need by 2025, minimum estimate, probably slightly north of 7 mtpa if can work out what happens in the non-passenger vehicle battery market by 2025 if the estimates are correct.

As per another post here on hydroxide been the better choice for batteries and the domain of hard rock, in effect I must say the estimates suggest there is scope for AVZ to enter at a 2mtpa configeration before 2025 (which produces in effect 400,000 tonnes of 6% grade spodumene).

Obviously the issue here is brine's role and possible other expansions in existing producers. So looking at the figures - your graph suggesting 2.1 million tonnes of 6% grade spodumene capacity in 2019 - and my estimates are over 7 mtpa required in 2025, or at least over 6mtpa in 2025, which means AVZ has an opportunity to enter the market IMO based on this data.

I mean, this thread is just not limited to AVZ, because looking at this BGS, SH have hope too (note I don't hold BGS btw). The opportunity is there IMO, but time will tell whether AVZ has got its act together to exploit it.

Finally, and for avoidance of doubt I don't consider myself an expert at all. I just research, use technical knowledge and conversions to see whether there is a possibility forAVZ to enetr the market pre 2025. I think there is and others need to do their own research because you should never rely on a HC poster for your investment advice IMO. I have said so in the past as well - refer Post #: 37646820

All IMO

Expand

"I get about 2.1 million tonnes of chemical grade spodumene concentrate capacity in 2019, accepting all the yellow in the above btw."

Firstly, thanks for your answer. If you think all this capacity is really going to come on line in 2019 I think there might be a problem based on my base case assumption that Tesla retains its 14% world wide market share in 2019.

With 2 million EV sales in 2018 and Tesla's recent stated market guidance of delivering 400k EVs in 2019, if you use my assumption for the base case (ie Tesla retain 14% worldwide market share of EV sales in 2019) then using your metric of 375,000 dmt of 6% spod for 1 million EVs/annum, the EV market in 2019 will reach

(100/14) x 400k = 2857142 = ~2.86 million cars in 2019 (base case)

which would require 2.86 x 375,000dmt spod = 1,072,500 dmt of spod as per my previous calculation on the PLS thread.

This is approximately half of that 2.1 million tonnes of capacity from that chart. That capacity doesn't include battery grade brine production and small scale production but at the same time my base case calculation doesn't factor in Tesla losing market share (ie expansion of non-Tesla EV car sales in 2019) or demand for battery grade lithium for non-car use.

Nevertheless if you believe that chart actually represents actual realisable capacity for 2019, it leave a big gap between supply and demand with supply based on cars alone exceeding demand (base case) by 2,100,000 dmt - 1,072,500 dmt = 1,027, 500 dmt excess supply in 2019.

To reiterate assumptions here are.

1) 2 million EV sales worldwide in 2018
2) Tesla retain their WW market share of 14%
3) Tesla 2019 guidnace of 400,000 EV car deliveries in 2019 and
4) Scarpa's calculation of tonnes of battery grade 6% spod for the production of 1 million cars/annum (50kg of lithium per car) = 375,000 dmt for 1 million cars
5) Base case supply doesn't include battery grade brine production and aggregate small scale production
6) Base case demand is for EV's only (2.86 million units delivered world wide in 2019 calculated using assumptions 1 to 3 above) does not include non-EV battery grade spod demand for other Lithium ion battery applictions.

Eshmun

Last edited by eshmun: 21/03/19

AVZ Price at posting: 4.5¢ Sentiment: None Disclosure: Not Held
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