Hey asxinvestor2024,
The power FEED from YPF Luz will be received in the next couple of days - as per the advice given in the Quarterly yesterday. I don't see the FEED itself being published for all to see. It is merely a box that will be ticked to enable Lake and YPF Luz to then move to the next step and start negotiating a power purchase agreement (PPA) for the long-term supply of power to the Kachi site. The power FEED will be covering the details involved in the already known power solution - i.e. the supply of power through the construction of high voltage power transmission lines to the Kachi site after the initial power supply for the first train of Kachi (12.5kTpa train) comes from a "power island" constructed on-site. The "how" is a given.
I'm not worried about the power solution these days, particularly after seeing the announcement of the Puna Electricity Project in January and the subsequent meeting of the Provinces (Catamarca, Salta and Jujuy) throwing their joint support behind it with an initial $400M amount and showing the project going all the way to Kachi. Further to that, we have seen the YPF Luz presentation illustrating the two stages of the project going to Kachi and, only last week, have seen YPF Luz attending meetings with the US Investment community in New York along with Catamarca Governor, Raul Jalil. The US has openly shown the desire to invest in Argentina for access to its critical minerals - demonstrated clearly by the US Department of Commerce Mission (made up of 15 US Companies) that visited Buenos Aires on 9-11 April....and the additional $10B line of credit given to Argentina by the Inter-American Development Bank - on top of the $20B deal signed off about a week ago with the IMF/World Bank to cover financing for public and private sector development for the next 3 years. The Chinese already have a solid footing in trade Argentina with things like beef and soybeans and there continues to be growing investment in Lithium as well - so the US has a lot of ground to be made up....and they know it now more than ever. The usual suspects scoff at any suggestion relating to a US/Argentina trade deal (including Scott Bessent's recent visit to Buenos Aires) but, when you consider all of the items of news together, it is impossible not to acknowledge that all of these visible pieces of the puzzle form quite an interesting and positive picture. It's easy to fob off these things in isolation - as they tend to do.
The US cannot "go it alone" to develop the necessary critical minerals supply chains and must rely on both domestic and offshore supply from "friendly" international partners ("friendshoring"). At the 28:27min mark of Joe Lowry's recent Global Lithium Podcast 207 with Austin Delaney of Li7 Charged (who was previously with Albermarle and Piedmont Lithium), when discussing US future Lithium production, the question of what the US needs to do was given as "There are not a lot of Lithium projects in the US that are gamechangers. What the US needs to do is find a way to support a domestic industry and, at the same time, forge partnerships with parties around the world that make sense for them"....with Argentina then being mentioned as making sense.
Episode 207: Austin Devaney - The Global Lithium Podcast | Podcast on SpotifyA similar discussion (at 10:25min mark) was had a week ago in a Rock Stock Channel interview between Howard Klein and Former DOE Deputy Director, Ashley Zumwalt-Forbes. "We need to "friendshore" as much as we "onshore".
Urgent Action on Critical Minerals w/ Former DOE Deputy Director, Ashley Zumwalt-ForbesNarrowing the discussion back down to Kachi, the ultimate proof in the pudding will be signing up a Strategic Partner - and with Lithium prices sitting where they have been, that is proving to be a challenge. But the Lithium price won't stay at $9-10k/T forever. Anyone that tells you that is a fool without the ability of foresight. Inventories continue to be drawn down, the supply/demand balance continues to tighten, the curtailment of supply from projects that are higher on the cost curve continues, demand from battery manufacturers continues to scale up with EV growth and very strong BESS growth, etc. We will see sustained increases in the Lithium price at some point soon and that should be enough to trigger strategic partnerships and offtakes getting done across the sector. We have a large, unallocated resource and that will be very attractive when that time comes. Until then, we are at a stalemate and have to concentrate on doing whatever needs doing to keep the lights on. We can expect the timeline to signing a Strategic Partner and subsequent FID to shift accordingly. In the meantime, we can focus on the things we can control and expect things like the EIA approval (mid-year), updated resource/reserve numbers stemming from the significantly higher average Lithium concentrations in the Kachi brine and the revised CAPEX and OPEX figures resulting from the improved performance of the Lilac IX beads (also mid-year). These revisions will shed light on where the Lithium price target needs to be going forward.....and it will be significantly lower than the $33k/T detailed in the 2023 DFS. These revisions are expected to bring us into line with a couple of other significant brine projects in Argentina - namely Eramet's Centenario project (with a CAPEX of around $1-1.1B for 24kTpa) and Rio Tinto's Rincon project (with a CAPEX of around $2.5B for 55kTpa).
There is a lot of water to go under the bridge on this one yet!
(20min delay)