General Discussion Topics, page-135216

I'm going to quote from a presentation that Paul Graves - former CEO of Livent and current CEO Arcadium (the merger of Livent and Allkem (which was the merger of Orocobre and Galaxy)). They will always be in "italics"

Keep in mind that Livent's history is Brines and DLE in Argentina - so Lithium Carbonate and also imported some of that carbonate into NC USA to further refine it to Lithium Hydroxide. It also acquire spodumene assets in Quebec via Nemaska and of course with merger it has the James Bay spodumene in Quebec and Orocobre's carbonate brines in Argentina ... which some is also further refined in Japan.

Here are some of the things he said ... and they will reinforce some of the things said here by a few and dispel some of the things said by the many.

"Allkem really made technical grade lithium carbonate. And in most market conditions, including today, that sells at a discount to battery grade lithium carbonate. Livent, because of its process, always made battery grade lithium carbonate. But because of our strategy, what we've done is taken most of that and we put it into the hydroxide network and make lithium hydroxide with it. The longer term benefit, really from a revenue perspective, is to take all of that battery grade legacy Livent material and sell it, and take all of that legacy, Allkem technical grade material and put that into the hydroxide network. And so you're certainly going to get $1, $2, maybe more sometimes, premium for battery grade over technical grade, won't make a difference to hydroxide. At the end of it, hydroxide’s the same when we're done once we're qualified with customers. It'll take us a little bit of time to do that. We have to get requalified through the network."

First point to consider ... premium for Battery Grade Carbonate over technical grade (obviously?) but no difference to Hydroxide - and note the "requalification process". Later indicates a timeline for qualifiaction "depending on who it is, somewhere between 3 and six months for a requalification, probably six to nine months if it's a new customer and a new qualification" ... this is not dissimiliar to what has been advised by SYA to the market and at AGM - right?

"... let's do the Fenix expansion, the volume from the legacy Livent. This is carbonate that largely has already spoken for into our hydroxide network. And you saw in our earnings slides, Slide 10 for anyone is looking, we disclosed what our contracted volume and hydroxide was, what our uncontracted volume in hydroxide was. And it's about 16,000 to 18,000 ton of contracted volume and 10,000 to 12,000 of uncontracted. But almost all of that uncontracted volume in 2024 is already spoken for in 2025 into contracts that expand. So somebody maybe had 5,000 tons in '24 and wants 8,000 2025, it's just going to move in there, that's all fed by that Fenix expansion. And so that's sort of all already contracted in the form of hydroxide. The stuff coming out of Olaroz, the technical grade carbonate, I'm not convinced that there's a similar contracting opportunity for a product like technical grade carbonate. It's not a specialty, it's easier to switch into substitute. It's a market that’s more comfortable with sort of unbound unranged variable price structures. So I think that is likely to remain not contracted at least not in the same way with contracted floors and ceilings."

Legacy Livent - produces Battery Grade Carbonate that is further refined to Hydroxide and that expansion is already "contracted".
Legacy Allkem - technical grade Carbonate - not a specialty, easy to switch to substitute and not contracted like Battery Grade Carbonate or Hydroxide. This implies and it gets specifically addressed, that perhaps Hydroxide is sold differently. But wait you say there has been a discount to "Spot Hydroxide" vs "Spot Carbonate". So that leads into discussion of pricing and contracts and volume. This is PG talking to the Hydroxide discount notion.

"I'm not sure I just I believe that. We don't see that. It's an interesting one. We always see these spot prices. But the problem with spot hydroxide is it cannot be the same product that we're making, because it's not sold spot, right? It's qualified material. There is no spot market for it. It's only sold under long term supply agreements. So that hydroxide is really lower quality, lower grade hydroxide sold in competition to lithium carbonate in various applications. I mean, LFP can switch between the two. It has slightly lower lithium content, it's slightly harder to handle. It's not a big surprise no one is paying a premium for that hydroxide, but we certainly get a premium for lithium hydroxide over that spot price. So it's a little difficult for me to, without disclosing stuff I can't disclose, to sort of rebut the argument that hydroxide sells at a discount because it really doesn't, through us anyway."

What's also interesting is what he has to say on demand - for Hydroxide

"I think it's probably fair to say that if we could add another 15,000 tons of hydroxide capacity in the US, that would be sold, too. And if we could add 30,000 tons of hydroxide capacity in the US, that will be sold, too. That push, the demand, the drive for more IRA qualified material is very much hydroxide focused. It's not really carbonate focused today. The high value supply chains and the high -- the most difficult material for people to source is IRA qualified hydroxide. There just isn't enough capacity out there, because most hydroxide today is made in China, which is never going to be -- never going to be IRA qualified, but there's a huge pool carbonate coming out of Chile that is IRA qualified. So the focus is very much on getting more IRA qualified lithium hydroxide. It's why the Nemaska facility is a really hot topic with most of our customers in terms of where that volume will go in the future"

Not enough IRA Hydroxide capacity - let that sink in - and why Nemaska is a hot topic - who gets what volume. Maybe these guys know a bit (or a lot) more than some others ... I remember a few of the "remarks" regarding the tradeoff studies etc.

Probably worthwhile to reread the Jun 2023 NAL Carbonate PFS - expectation is ~23Ktpy of Battery Grade Carbonate from 186Ktpy of SC6 with AISC of US$11,997/t and ASP of US$25,585 and Capex to complete estimate of ~US$412M (-30% to +50%) but I expect closer to US$618M. This is of course not a commercially economic proposition at present pricing levels - same as PLL's TLP and others (e.g. ALB SC Mega-flex).

Nonetheless, the Livent also built capacity in China by 15Ktpy - due to hard economics

"That facility took us about eight months to build. The one we built in the US took about two years to build, a little bit less. It's 15,000 tons. The one we built in the US is 5. The one in the US cost is $105 million. This one costs $21 million. If we were to build a 15,000 ton line in the US today, it's probably a $200 million investment compared to $21 million in China. There's a hard economics to argue with."

Ouch. But someone's gotta pay if we want the supply chain EX-CHINA.

There's more to the presentation and Q&A but I think the above is most relevant to SYA when we talk about downstream and the coming DTS for this plant.