Well this is an interesting development. Whilst it probably won't have too much of an impact on the market and I doubt it is actually price sensitive, it shows an excellent change in strategic direction for the company - I am also happy with what appears to be a fairly regular news flow starting to come from management. As it says in the announcement, the focus until now for lithium exporters/producers/offtakers has been with Asian producers, but joining networks such as the European Battery Alliance will only increase our visibility with western producers and could definitely lead to very good things for CXO.
This is another strength for the company as we have no idea if the current trade issues will flow through to Australian lithium producers. The current squabble with China may increase the risk profile for producers that have a lot of their product tied up with Chinese interests, and could be a potential cause of concern going forward. By and large, this could effect most of the producers in Australia to date as Asia has been the main buyer to this point. We have the excellent opportunity to diversify and better hedge our customer base going forward. This represents another feather in our bow so to speak - we already had the very low cost base, and now we can further differentiate (and de-risk) ourselves by developing a broad customer base that has previously not been a focus for other producers. The game now is not to chase any money that comes our way rather to ensure we engage with the right money - this alliance seems to be an excellent way to do this.
I never would have thought this a few years ago, but us being a little later to market is really starting to look like a strength!
CXO Price at posting:
4.9¢ Sentiment: Buy Disclosure: Held
