Understanding lithium demand, page-742

I was essentially alluding to the issues you have raised in this post - Post #: 40576715

So you may want to open up the above post and go through the links etc. The key IMO is understanding lithium carbonate and lithium monohydrate specifications, and what type of inputs are needed.

Chemical grade lithium - general
For chemical grade lithium applications, a miner would want to be aiming for probably 1% Fe203 tops,probably even lower than that at 0.6% - 0.8%, in the spodumene concentrate sales IMO to extract the best price from a buyer. IMO of course because public data is not generally not available,albeit you do see some specifications out there for Greenbushes. Impurities in effect is price reductions paid by converters to miners.

The buyers chemical conversion process IMO is pretty tightly controlled around the inputs it uses and the way it might blend inputs if the converter, say, gets spodumene from one producer which has specifications a little higher than their conversion process usually deals with. From a process flowsheet perspective your converter process, IMO and again open up the embedded post above to see what a converter process flowsheet looks like, is finely tuned and the aim of the converter is to control costs by ensuring the feddstock is something your finely tuned process flowsheet can actually work with, because tinkering with processes to treat different grades of ore continually comes at a cost and risk.

The 'blend' concept is not new - whilst upstream, just look at what the Pilbara blend means in iron ore sales from the Pilbara - it is simply a concept that the steel producers downstream know comes in at 62% Fe and has x x x in it and the steel producers can know with nearly 100% certainty it will produce x quality steel. What is unique in you example is the blending is been done by the downstream converter whereas blending is generally done at the mining level to meet the downstream needs.

In other words, the downstream converter pays for what it gets - it is why 'same' products (spodumene is spodumene LOL) sold by miner get different prices (just like iron ore prices differ - it is about differing grades and makeup of the product specs sold). Going back to lithium I explained some of this in the PLS forum where I said you can be selling at your contract specs but if those specs are not the optimal specs for a converter you get a lower price - Post #: 38419435 and Post #: 40269083

The above is explained in the article below - you have to copy the link and paste it into your browser - fundamentally you are not going to get a high price for a sale where it is going to cost the converter money in the roasting process to get it to battery grade, and that might have its own difficulties in doing so IMO.

https://books.google.com.au/books?id=YStqDwAAQBAJ&pg=PA2294&lpg=PA2294&dq=fe203+content+in+spodumene+batteries&source=bl&ots=HrHQgK2IHs&sig=ACfU3U1x32qKDE8Mz8ciGmhniA7r3VUiZQ&hl=en&sa=X&ved=2ahUKEwiqmYisuPrhAhXYAnIKHfDmCWQQ6AEwEXoECAkQAQ#v=onepage&q=fe203%20content%20in%20spodumene%20batteries&f=false

The links below explain this further:
https://www.911metallurgist.com/blog/froth-flotation-spodumene-processing-lithium-extraction

Actual specifications - monohydrate and carbonate

Obviously the roasting process in the downstraem converters significantly reduces the deleterious elements in the concentrate but they come at a high cost, and in some cases I suspect you still can't reduce to the required specs (noting iron is only one of the elements you need to get to the required range).

Here are the specs for battery grade lithium carbonate and Fe is in PPM terms at 10 or essentially 0.001%,with LiCO3 been 99.5%:
http://palith.com/english/product/index.php?act=&sid=23

For hydroxide battery grade impurities need to be less:
https://livent.com/wp-content/uploads/2018/09/QS-PDS-1021-r3.pdf

Your question and blending
The problem with two much iron and deleterious elements - again refer this embedded post Post #: 40576715 -is they form clinkers and in the roasting process you can recover less than 75% of the spedumene in the concentrate when that happens. Most converters operate on 85% - 90%. So first call on price impacts - price for the spodumene is a function of the recovery rates and cost a converter has in extracting the spodumene for chemical grade applications.

If the spodumene you are buying is high in impurities, well you are not going to pay a high price for it. But here is the catch. If you can get access to good quality spodumene well you mix the two and Bob's your Uncle because mixing the two in the right quantities reduces the 'impurities' of the 6% grade spodumene feed itself (i.e. the blend) into your converter process. And short term you may make more profit than someone just buying great spodumene because you pay a lower proce for the not so good spodumene and a higher price for the good spodumene.

I use the word short term because ultimately the blend is hard to keep managing if your spodumene purchases continually vary and are from a number of players, because like a guitar a conversion process IMO can go out of tune when handled at the edges of its optimal performance criteria and therefore will need tuning regularly, and that comes at a cost (and the more you have to fine tune your process because of the varying specification of spodumene feed (impurity wise) well the greater the probability you are going to have problems at some point). The Pilbara blendin iron ore works because BHPB and Rio have access to the actual ore, and they have lots of it, and it is them that blend it for the buyer - just imagine the steel producer having to do it constantly themselves rather than BHPB (i.e. they will make mistakes IMO at some point) and see what risks that arises for them.

Probably a round about way to answer your question - long term a converter wants access to high quality spodumene. It doesn't want to continue to blend itself especially. Lets look at your example, Ganfeng wants a massive expansion but it can no longer access the good quality spodumne to be able to blend with the greater volume of spodumene it might buy from someone else who has higher impurities in their spod etc etc Ganfeng though is seeking to vertically intergrate therefore the strategy may still work for them, albeit remains a risk, in future because been vertically intergrated it is also at the coal face of mining so might be in a better position to understand blending than converters who are not vertically intergrated.

It is why in an expanding industry, and noting lithium prices are opaque, access to quality and volume matters for converters, where applicable.

A haven't even had a VB this morning and writing an essay. Apologies for the lack of clarity in writing this.

All IMO IMO IMO