@ozblueFirstly I am not a holder of PLS but I admire its resources. It's huge and very valuable. I am posting here but I have no interest in PLS atm. I am completely tied up with another lithium stock.
Your calculations are correct about the planned world LCE production capacity which brings it to 800,000 LCE in 2022 however nothing ever goes according to plan, circumstances change as you said again.
See this graphic from Orocobre's preso. Promised vs Completed. There is big differences. The promised can't be realised in time. And this is only for the chemical plant which are easy to build. A mine expansion is more difficult and carries more risk.
Therefore I don't think that all those expansions to reach 800kt LCE production of battery grade chemicals in 2022 will be delivered in time. ( the statistics show that)
Also, as the closest example, PLS will not be able to supply 330t concentrate in less than a year.
A40's 160kt can't be only for a long time (I don't know how long).
Altura's 220t is also in danger as they are struggling too. Both of those producers are high cost producers as well.
Mt Cattlin of GXY; 200t ! How long and what grade they will be able to supply it as they are running out of ore. Would they even be able to see 2028? I don't think so.
BATTERY MEGAFACTORY CAPACITY IN THE PIPELINE EXCEEDS 2 TWH
Benchmark Mineral IntelligenceAugust 28 2019How about this?
2000GW battery capacity would need 1.8mt LCE in 2028, but not technical grade, it has to be chemical grade for batteries! (you need 0.9kg LCE for 1kW battery capacity)
Who is going to supply this? The deficit from 2024 for 800kt LCE to 1800kt LCE is 1000kt LCE!
I can't see the lithium exploration activity to close that deficit now. And I don't think it will happen in next 5 years.
Not all lithium is equal...Do you think all of those 800kt LCE will be chemical (SC6) battery grade?I don't think so. 40% to 50% will be technical or industrial grade. And most of those producers produce technical grade concentrate, not at SC6 standard and some of them with higher iron content than 0.8% as well.
You know not all lithium is equal. When we talk about lithium we have to talk about the same thing. Otherwise it would be misleading.
There are mainly 3 types of lithium
- Industrial grade (less than 5% and high iron other impurities content)
- Technical grade (less than 6% and high iron other impurities content)
- Chemical grade (6% and over with 0.8% iron and low impurities)
Do you know how long long Greenbushes will continue to supply 2300tpa of LCE?Even the resources of Greenbushes Talison Mine are not all chemical grade. The bigger part is technical grade. See the graphic from their prospectus in 2009 Not much changed so far).
Then how long they can supply the 2300tpa LCE? Maybe 10 or 15 years. Say in 2030 they will have very low resources. (Their C3 pit has high grade but C2 pit much lower grade around 1.1%, C1 kaolin pit nearly weathered, not much left I think).
That's why Tianqi and Albemarle are both looking for new high quality resources. Albemarle bought MIN share of Wodgina and Tianqi bought 24% of SQM but it's brine, not very good)
Lithium Brine production is not cheaper than hard rock production for LCE, and being at high cost other than Atacama producers (SQM and Albermarle).That is now a know fact that FMC and Orocobre have very high costs (I can provide their cost figures) as they are producing other places in Sth America which have lower grades than Atacama producers, high impurities, and weather problems (dilution by rain).
Producing lithium hydroxide for batteries are the mainstream now and producing it from brine is much more costly than producing it from hard rock. We all know this I guess. Here is a graphic explains it.
There are already information that producing Lithium hydroxide from hard rock is even cheaper producing lithium carbonate from hard rock. It's will make the hard rock resource much more valuable.
Therefore I am not counting on lithium brine resources for chemical production for batteries. that would bring down the 800kt LCE for battery grade chemical production even more. As the last word, problem of PLS is not technical but commercial and managerial. They will be fixed and PLS will be OK imo. PLS is a first generation lithium producer. that has been a big disadvantage for PLS.
The current poor producers including PLS (A40 and AJM) are paying the price of being inexperienced in lithium business.
Lithium industry is a niche and highly technical, and a new thing for the miners and upstream developers. Setting up a lithium plant is not that easy as it seems. You would need either of these (both is better indeed);
- a very high grade ore like Greenbushes (over 2%) or
- very well skilled technical teams to design the plant, make the commissioning finely tuned, cope with the problems, and of course high quality processing machines.
The reason is PLS failed IMO; wrong plant design, choosing stupid shortcuts in desing, can't remove the iron which is normally easy to remove despite costly. The they had serious production issues (can't produce SC6 spodumene concentrate) because of the plant design and construction caused by their collapsed contractor RCR Tomlinson? (explained as "continued rectification of RCR defects" on anns.)
The management was not fit for the job IMO. Very simple mistakes but big and bad consequences. Now they are making the necessary plant upgrades. the it be OK.
The iron issue was discussed here and I was watching. My thoughts are as follow;
There can be two types of iron in the produced concentrate.- Iron from the ore
- Introduced iron from the machines (ball mills etc.)
The accepted iron percentage in the SC6 (Spodumene Concentrate 6%) for chemical grade is max. 0.8%. This is being the battery grade SC6 and was set by Greenbushes operations before 2010.Removing both types of iron is not so hard but a little bit costly.You need more equipment to make more process in your plant to remove the high iron.I am saying not so hard because it was believed before and disputed in PLS threads that the iron in the spodumene lattice was not possible to remove so PLS was having big problem. That was not true. It is possible but costly. I believe now PLS is ordering new machines to remove the iron properly to make a low iron concentrate. They will be able to produce a SC6 standard concentrate soon, but yes they have to spend some amount of money so need a new CR. They will produce the right concentrate. But the damage is done. It will take months to be in a profitable operation. Next year at least.
PLS has a huge world class deposit. Management's mistakes will not get that fact disappeared.
230mt @1.27% Li2O grade, in Australia is a significant advantage. KDR-WES and MIN-ALB deal gives us the idea. I don't think I should talk about this fact nay more than this.
I wouldn't follow and believe in the shorters and downrampers' opinions.
$650m (plus debt) MC is nothing for PLS. It has to be double of that amount at least. At may take time but as @Ozblue said no point any of you having fear and panic.
PLS s along term hold blue chip IMO.
(20min delay)