Time will tell if Mr. Donohue's JV decision is a master stroke or a flop. However, based on the 5 points below as described in this old article (
Not All Lithium Projects are Equal), it has the potential to be a master stroke as it gives KDR high probability to become a serious producer.
1. One lithium product is not the same as another
KDR's high grade Lithium plus SQM expertise in the field will likely lead to high quality product.
2. Regardless of Tesla’s Gigafactory, the real buyers are from the East
SQM has access to their own global network of Lithium buyers and KDR doesn't. Additionally, if
GSR do end up acquire a stake in SQM, this can potentially give SQM even bigger access to the supply chain network within China and Asia that even SQM doesn't have.
3. Carbonate and hydroxide are not the be all and end all
Beside Li, KDR also has gold on their sight.
4. The price the product achieves is fundamental to investment
The existing infrastructure already in place and SQM's expertise in building the refinery will hopefully help to keep CapEx as low as possible and reduce the chance of missing deadline, increase speed to market and keep aisc down.
5. Technology plays a bigger part in a lithium-focused investment decision than other more established sectors
Again, SQM's expertise plays a big part here and will hopefully help KDR to avoid ORE's problem.
Additionally, it seems that to continue to be the world leader in Li production, SQM is now focusing elsewhere (i.e. Lithium Americas and KDR)
per this article.
Despite the unhappiness of some shareholders about the JV decision, I believe in time it will prove to be the right one and will continue to accumulate. Not happy with the SP atm, but need to be patient.
