Not cross promoting as I don't hold LTR yet, but the following article is a great Q & A with LTR's CEO on their long term strategy, market dynamics, PLS getting a mention wrt BMX platform
https://unauthorised investment advice/resources/liontown-resources-boss-tony-ottaviano-on-selling-into-the-worlds-hottest-commodity-market-lithium/?utm_medium=email&utm_campaign=Morning%20email%20Thursday%20January%2013&utm_content=Morning%20email%20Thursday%20January%2013+CID_fa0118e4f851f719b78b704da88688a1&utm_source=Campaign%20Monitor&utm_term=Read%20MoreIt’s the word on every investor’s lips right now: Lithium.
Spodumene was fetching around US$400/t just 18 months ago.
In October, sold a spot cargo on
Analysts are becoming less confident those price pressures will ease in 2022.
High flyer
, Liontown’s aiming to take the upper hand in debt and offtake negotiations.
I imagine the offtake deal was a lot of work, especially given you couldn’t go to Korea to discuss it.
That is pretty remarkable, but I guess it speaks volumes for the significance of securing lithium supply for companies like LG.
“And when you go to the banks, the banks say ‘well, you need to put a floor price in the contract.’
Liontown Resources share price today:
This is obviously very different from the way of funding a lithium mine or securing offtake for a lithium mine four or five years ago, when the industry was first really ramping up. What does that say about the way the power balance has shifted in favour of the producer?
“And we saw that with some very competitive rates that we’re getting from the banks.”
This is about 30% of your initial production. You have more negotiations underway, how much are you looking to place with offtakers and how much do you want to leave yourself exposed to the spot market?
So there’s upside there on spot for that sort of auction model that Pilbara Minerals have pioneered?
“And it could be the BMX platform, I just need to do a bit more work to understand it better.”
What are the offtakers saying to you about their efforts to secure supply? Are they telling you how desperate they are to lock down supply, knowing that a deficit’s coming in?
“It gives them strategic optionality and that took a bit of time to get them on that journey.”
So you’ve got LG in Korea. Do you have any EV makers themselves that are trying to get in for offtake? Have you been speaking to Tesla, BYD, Volkswagen, those sorts of players?
“And that’s the one of the biggest, the second biggest mining company in the world.
What do you think of the prospects of getting that next stage beyond the initial mine, the refinery, in place and do you have a good sense of where you’re going to be looking to build that?
“It’s a good question, Josh. We want to do this right.
“The next step we want to make sure is very considered. So we’ve ticked the downstream into PFS.
“And the first thing we’ll do is a fairly detailed testing program and piloting.
“So I don’t know how the people that are building hydroxide facilities (will go).
Just on the lithium market itself, obviously we’ve seen the price, particularly for spodumene and like you said before, carbonate is really skyrocketing and we’re talking about 300% increases across the three major price points or price indexes. Is that going to continue?
“Well, I just saw a report today by JP Morgan, have you seen that?
“They’re predicting a huge increase in spodumene price this year and next year.
“They’re saying we’re in deficit now, right to the end of the decade.”
So that deficit’s about double the current market? Wow.
Do you think you might need prices like that to incentivise sort of lower margin production as well?
“Yeah, so you’ll get a lot of currently uneconomic lithium being brought to market.
“So it’s going to be an interesting 2-3 years.”
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