Released by Macquarie Research 18 Apr 2024 "Global Lithium Miners and Refiners"
This is for epecially for you
@Kevo88 and
@Paddywagon1982 ... a little bit more on "margins" in refining
Context is required ... this is China focused.
So as we "zoom out" (from an integrated China (hardrock) refiner ... which is going to be lepidolite based mostly) to integrated in the sense of same company (like Ganfeng taking PLS ore and refining in China) to a truly integrated refiner (like say ALB processing Greenbushes WA SC into LiOH and ALB Kemerton WA refinery)
Those numbers look like this ... and its SC 6 and using 8 tonnes with M&C Opex of US$418/t (can we get that at NAL?) and a refining cost of US$4,178 (not my number Kevo ... but IMO it is low as they use the same number for Chinese based refiner Opex ... China is just a lower Opex location than WA or Quebec) for total cost of $7,521/t
With ASP of Carbonate at ~RMB 115,000 ... ~US$16,500 the potential margin for the fully integrated
WA Miner/Refiner is 54.4%In the instance where a Chinese refiner is buying SC on market ... the miner is now just selling it at US$1,190 as shown below ... then the
WA miner's margin is 64.9%Again ... the miner's margin is higher than the miner/refiner margin (and of course way higher than a standalone refiner).
But also important is that there is a much higher Capital Intensity (the refinery costs way more than mining/concentrating plant) and that the risks are higher (as has been evidenced by the difficulty that experienced refiners are having get these ex-China plants going)
Now if I were a WA SC exporter I would be concerned with this graph
Look at the growth of Zimbabwe SC at the expense of Australia SC ... no wonder PLS locked down further capacity and term for their Chinese buyers.
IMO Caution is warranted and there is no need to rush downstream. NAL going downstream is not going to be a walk in the park (starting with a half built plant notwithstanding). I don't disagree that downstream should be the goal for NAL - the moat is not exactly wide in SC mining and commodity prices can be volatile as we have experienced. So too though speciality chemicals ... not quite as volatile but they still move about.
The way forward though doesn't stop with Lithium Salts ... it stops with something that's "consumed" and our biggest "consumer" is the Auto OEM ... or more specifically EVs manufactured in North America. Our partnership lies within that future supply chain - what we do now is temporary and I don't see downstream (at NAL) in 2 years time ...
And as far as Carbonate goes ... no hard rock miner/refiner holds a candle to Sth American brine and/or brine/DLE on a cost basis which is about US$4,000 t (excl tax).
Food for thought (hopefully)
(20min delay)
