Inside the Mind of a Commodity Trader & China Analyst@lostman
"Mmm.. Perhaps you are not aware but this is actually something they do very well" you said.
Mmm.., yes I don't much about the Chinese and Africa... LOL..
I am in stock market for 17 years, I have followed, researched and involved in many ASX company investments clashing with Chinese interests during this time, I have been in China many times for business before that, but I'm not aware of what the Chinese can do. Yeah you might be right!
Everybody in this market knows what the Chinese can do and can't do. You need to look at those mining issues in Africa from different perspectives.
Did you see my Post #:
78968681 about all African issues?
First of all I said on my previous posts China has a strong presence in the DRC, there are couple of big Chinese mines in the Katanga province at the south. So the Chinese knows DRC well and they can do things there. But it's not the issue what I was talking about.
You can just say
"All done! We transported all the material to the site, we constructed the plant, we have started the production, we built the roads, and we will send the goods to the ports and transport them to China".
No it doesn't work that way. You have to deal with these African countries, with their governments and locals, including resident and armed rebels. if you can remember I said on one of my posts that
the government officials, armed groups and rebels at the area won't touch you until you build the plant.
When you finish the plant and mine construction and start exporting then the African players comes to the stage.
The African governments get considerable shares in these mines. Same for Ganfeng's Goulamina project in Mali (Gov. owns 35%) and same for Zijin's Manono project in the DRC (gov. owns 39%).
The govs also can take the mine project from your hands at any time. You can't do anything. China has no policy to send its troops to invade any country. It want do it. They can only negotiate.
The African governments will try to squeeze the Chinese in these projects over the time. They try to exploit the Chinese as much as they do because they now know very well that Chinese will exploit them as much as possible as well.
Because those govs are shareholders in these mining companies and they expect to see profits and taxes paid as high as possible.
You can't say "Hey Mr Gov, the spod price is too low, what can I do? There is no profit this year"
They will say the Chinese "Hey your export price is too low, what are you doing, get out of here". Then the conflict starts. The govs will say, "hey I will ban only the spod exports, you must refine it here and export, then we can more profit". This is happening in Zimbabwe now. Also Mali now export bans. (Indonesia did the same thing for nickel concentrate exports to China. They banned it. The Chinese companies had to build the smelters in Indonesia)
Also the transport cost from Africa to China is around US$150/t to US$200/t. How does that sounds to you? (You can see it's clearly told by the commodity trader in this podcast of MoM; Inside the Mind of a Commodity Trader & China Analyst"
The production cost of spod in Zimbabwe is known to be around US$400/t. When you add $200/t then it comes to ave. $575/t. That is a lot of money and the end cost to Chinese as well. We don't know the grade of that spod, we don't know if it's from spod or petalite concentrate. When the Chinese considers the country risk of Zimbabwe they should buy the spod directly from Australia.
As you will know the owner of Bikita mine in Zimbabwe is Sinomine. And Sinomine buys spod from LTR. Other two Chinese companies owns lithium mines in Zimbabwe also buys from PLS.
As a result, because the lithium market was not mature and not big enough for the big players the lithium price was being manipulated heavily and it still is.
But the lithium market is getting more mature every year. The big players like CATL, BYD, LG, and all auto OEMs now have been sure that the lithium is the most strategic mineral of all.
Importing patchy lithium concentrate and brines from all around the world without supply disruption is not possible. The sovereign risks are huge for the supply chain. So those big players are also getting mature boys now. They will think twice for their lithium suppliers.
They know that Australia is the best supplier for them. But they are stupidly trying to kill Australian supply other than Greenbushes which is under their own control. That's why I'm saying the Chinese is shooting themselves in their own foot.
(20min delay)