Why would they lock in at these prices when demand side is clearly pointing to higher future prices.Well for starters nobody knows what the price of Lithium will do in the period of this particular contract but the current price is still very good.
Yahua plans to be a long term partner, needs concentrate and obviously has the conversion capacity to take it .
CXO on the other hand has product ready now and is about to enter a period of no production between when the current stockpile runs out and mining re commences at Grants pit (perhaps around 2 months ) which meant a period of expenditure with no revenue .
Basically as a gesture of goodwill as a long term partner plus its own requirements , Yahua is taking the current production and agreed to pre-pay 80% a further 15,000t, as CXO has stated helps with their cash flow .
Its a one off arrangement and good for both parties IMO, things will revert to normal once Grants pit is up and running...
Cheers Whisky
