PLS has 1 of the 4 best spod based hard rock resources
I believe the cause of problems which which the current 1st generation lithium producers are facing is technical and managerial rather than commercial and financial.
I am not a PLS holder and no intention to buy in the short term as I am fully invested in another lithium stock, but survival of PLS matters to me as I am invested in lithium sector. I believe PLS can fix all its problems and survive, and can be 2nd or 3rd largest lithium producer in the world, unless the management makes further mistakes.
PLS has a Tier-1 spodumene based hard rock resource despite its ore has high impurities (mainly iron and mica) which makes the process cost higher, it is still very important resource for the lithium market of the world. There is no way that it would go bankrupted or remain idle (care & maintenance) for long time. It’s a rare Tier-1 resource. It’s one of the best spod based four hard rock resources in the world (excluding very high risk and landlocked African resources).
I believe the next generation of producers who are the developers of large scale projects now; firstly MIN-Albemarle, then KDR (WES)-SQM and the LTR-(?) should/will take their lessons from the problems of 1st generation producers. I am also hoping and wishing AJM and A40 can survive from their current hard situations.
The EV Revolution is real and happening now.
the EV revolution is not only limited to EV cars, it’s about the battery operated trucks, buses, ships and airplanes, and hybrid version of those vehicles .
There is no alternative to lithium in the horizon as there is no other technology can get close to be a rival to lithium in terms of executed and committed commercial investment volume.
The battery Gigafactory capacity is today around 200GW.
10 times higher than today!
The EV car sales in 2018 was around 2m. That was the 2.1% of whole car sales. This year's result is expected be at 3-3.5 million with a monthly record maybe at around 500,000 and market share of over 3%.
The yearly demand will be around 60m EV in 2040 with a market share of around 40%.
And the EV sales will catch the ICE sales just before 2050 according to the forecast.
The world battery fleet will hit to 1 billion at that time as you can see on the forecast graphic below.
MIN -Albemarle (Wodgina) has 7.5mt,
PLS (Pilgangoora) has 7mt,
KDR/SQM (Earl Grey) has 7mt
LTR (Kathleen Valley) has 2.5mt,
MIN-Ganfeng (Mt Marion) has 2.4mt
What makes Australian spod based hard rock resources so important?
The Australian deposits are very important for the world lithium producers and mining majors, even for the vehicle manufacturers. It’s because;
- Australia has the best securely and economically mineable hard rock resources in the world.
6-2-2: (6 part Nickel-2 part Manganese-2 part Cobalt)
8-1-1: (8 part Nickel-1 part Manganese-1 part Cobalt)
Integrated production (supply of spod always from same mine in same specs to the chemical plant) is the key
The problems of some lithium concentrate producers in Australia atm is not surprising, and it is not caused by the oversupply., but it’s true for industrial grade lithium concentrate.
other than Atacama producers (SQM and Albemarle) can’t produce right concentrate at a competitive price (Livent and Orocobre have costs over US$4,000 per tonne of Lithium carbonate). . We can't blame them. (different iron, mica and other impurity levels) causes failures and down times in the converters because they buy feedstock each time from different suppliers, even different feedstock specs from the same supplier. converters need SC6 spec concentrate with low iron and other impurities and needs the feedstock supplied in same specs. the right and competitive price the producers (mines) need to have a high grade spodumene resource with low impurities as the plant recovery rate and concentrate grade exponentially increases as the ore grade increases and impurity level decreases . . That will reduce the production cost of converter plant. (PLS does not have this option for now but might have it with Posco. It has 4 maybe 5 now including CATL offtake partners).
All explorers and miners will learn the importance of high grade – low impurity spodumene resource .
Problems of current 1st generation spod based lithium producers are technical and managerial rather than commercial and financial.
The lithium price was too high in 2016 and 2017 when the supply was limited, and the demand was high. It was obvious that the supply was going to catch the demand at a point and the price would fall even thought the demand would be still increasing. That is called “Market Equilibrium”.
The current poor producers 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.
Let's' have a look what Roskill experts said last month;
"You have very small industry that’s trying to grow rapidly, and the technical expertise and the base knowledge to that is actually very limited, just because it was such a niche market. "
… these projects look very attractive very often on an operating and capital cost basis but actually the thing to really understand with the lithium is the technical risk associated with them" .
VIDEO "Roskill analyst Oliver Heathman and associate Charles Cooper introduce Greenfield Battery Raw Material Projects for the 2020s report. The first of its kind, the study examines over 50 of what they describe as the top greenfield projects that could produce the key raw materials for the Electric Vehicle battery market". What PLS must do first is to get the plant working properly to eliminate the technical risks.
The process will be at much higher recovery rate with higher lithium ratio in concentrate. These are not impossible tasks; they only require money and right experts to do job.
Competition for spod concentrate will always be there, but demand for lithium increasing, the key for profit is to be low cost producer but not necessarily the lowest cost.
The world’s committed battery capacity in 2028 is now calculated as 2TW (2000GW). That makes around 1800t of LCE. 6 times larger than today! And most of it will be in li-hydroxide form of lithium.
Greenbushes has short mine life now because of large expansions. And it will mainly feed its own chemical converter plants in WA.
Therefore, there is still a lots of room for Tier-1 projects in the lithium production market.
(20min delay)