i wasn't actually planning to reply today. unfortunately, i have to disagree with this post. if you consider 60,000tpa on a lce basis as 'more pain to come' then thank you for trying to unsettle others.
in fact, an annual production output of two million tons of spodumene and another two million tons of petalite is stated. first of all, petalite cannot be processed into sc6 due to its nature. the quality of two million tons per year is actually inferior. let's take the production output of two million tons of spodumene. an essential part of the calculation here is how high the harmful influences (for example iron) are. these have a considerable influence on the quality of the end product to be produced in the further process. the average li2o recovery rate and the average purity of the final product also have an influence on the actual quality of the spodumene. in addition, a production location such as zimbabwe unfortunately does not speak for the highest quality standards and partly opaque studies, which make it difficult to classify the quality and composition of the concentrate. it should be noted that the stated two million tons does not refer to the annual production volume of spodumene, but to the capacity of the plant. sigma lithium, for example, has an annual capacity of 270,000 tons of concentrate (which, according to the company, is approximately 36,700 tons of lce per year).
the quality of the spodumene / sigma lithium leads me to a point that i noticed today. on 18.03.2024 sigma lithium an initiation letter of arbitration by lg group subsidiary, lg energy solution, ltd. (“lg-es“) from the international centre for dispute resolution of the american arbitration association. so what had happend?
'in its request for arbitration, lg-es alleges that sigma lithium is in breach of certain provisions in connection with the october 5, 2021 term sheet relating to offtake agreements for the purchase of lithium concentrate from the company. the term sheet was conditional upon, among other things, the completion of the negotiation of definitive written agreements between the parties.'
'sigma lithium and lg energy solution sign milestone six-year binding term sheet for lithium offtake agreement' and 'lg energy solution to purchase on a “take-or-pay” basis 60,000 tons per year of battery grade sustainable lithium concentrate for the first phase of sigma lithium’s production, increasing by 40,000 tons per year during the second phase of production, for a total purchase on a “take-or-pay” basis of 100,000 tons per year.' and 'the six-year lges offtake for battery grade sustainable lithium concentrate scales from 60,000 tons per year in 2023 to 100,000 tons per year from 2024 to 2027...'
a 'green tailings environmental offtake agreement' published on 03.05.2023 between sigma lithium and yahua caused confusion. yahua apparently acts as an intermediary or refiner for up to 300,000 tons of spodumene, which in a further step will be refined into battery grade lithium concentrate for use in electric vehicle batteries and later supplied to lg es. on the same day, it became public that sigma and yahua had entered into a spot sale agreement for 15,000 tons of spodumene concentrate. sigma received a 50% prepayment for the shipment of the 15,000 tons on 26.05.2023 and received a premium price of 9% of the lithium hydroxide index. this was the first and only delivery under the agreement with lg-es. on 21.09.2023, 22,500 tons of spodumene concentrate were sold to glencore for the first time. also with a 50% upfront payment and also at a 9% premium to the lithium hydroxide price. a further 64,000 tons were subsequently sold to glencore in three additional deliveries. in fact, glencore has displaced yahua as a buyer. they reduced the price over the course of deliveries to a premium of 7.5% of the hydroxide index. if you consider that prices have plummeted extremely at this point in time, sigma's sales have plummeted as a result. nevertheless, glencore's conditions must be more lucrative than yahua's.
unfortunately, i haven't found any information regarding the terms and conditions of the deal with glencore. i also haven't found any expressions of interest from glencore, which could help us move forward in our debate about a possible time frame for the dd. finally, what can be said about this?i think that glencore is a raw materials trader that buys high-quality products at premium prices, but negotiates better conditions with its suppliers. i can only explain why the dd takes so much time by the amount of advance payment. with this article i just wanted to show you that, despite its obvious market power, i consider glencore to be an extremely fair negotiating partner when it comes to purchasing lithium.
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