Good question
@svencandy.
With regard to the conversion that I have mentioned above it was from spodumene to lithium chemicals.
If it's ok... I'll give a little overview as the answer is probably not as simple as... "Yeh that's right"
Just to understand the basics will make sense to the final answer.
A vertically integrated model such as Greenbushes, their costs would be mining the spodumene, processing it via their concentrator then shipping it overseas to their converter.
Incedently one of those converters is Jiangsu that was previously owned by Galaxy.
From my understanding it roughly costs Tianqi around $250 per tonne of spodumene inclusive of shipping and if it is being processed via the Jiangsu converter that is predominantly automated (Elon Musks wet dream) then when you multiply those $250 by 8 (it's actually less for them) it's hypothetically $2000 per tonne plus the conversion cost which is around the same at +/-$2500 per 8 tonnes processed.
So your roughly looking at a cost to produce that 1 tonne of lithium at $4000 to $5000.
That is vertical integration...
However Galaxy works on under a different model.
Simplified below.
Previously Galaxy would sell their spodumene at a set price of... I dunno say $800 per tonne..
The converter would buy it, ship it... At I think general consensus is $50 per tonne, convert the 8 tonnes.
So the converter has the cost of the 8 tonnes of spodumene and shipped in this example at $6800 which is already around $2800 to $1800 higher than the final cost of a fully integrated miner.
They then process the spodumene/concentrate which for arguments sake we will say is the same cost as the Tianqi Greenbushes operation.
So throwing $2500 on top of the $6800 we have a total cost for that single tonne of lithium chemical at $9,300.
So you're looking a a cost comparison for both the integrated and the miner sells to converter of pretty much double.
And then the cost goes on top..
If you want to play around with those numbers you could consider that some of the converters are not automated... and their costs to convert can go up to $3500 per final tonne of lithium produced. Maybe more... I don't know.
Looking at the above if we go across to brine costs can vary from. (I think it was) just under $2000 per tonne up to $4500. (Sometimes more)
That's it.. and probably a little bit of shipping.
If we then compare our vertical integrated hard rock production, with our miner sells to coverter, with our brine..
- Miner to Converter: $9300 up...
- Vertically integrated: $4000 to $5000
- Brine: $2000 to $4500
We could say that with supply chain model we can see that each is generally half the cost of the other.
If we use according to the Galaxy Sal De Vida DFS the final sale pricing of $13,500 per tonne to be fair and equal to each of those supply chain model we see the following profit.
- Miner to Converter: $4200 (up 45%)
- Vertically integrated: $8500-$9500 (up 190%)
- Brine: $9000-$11500 (200% to 575%)
Currently, other than Greenbushes, all spodumene concentrate mining will fall into the Miner to Converter category.
Tolling, which is what lots of converters were forced into when Galaxy closed Mt Cattlin previously, involves the miner shipping to the converter, getting charged a conversion fee which might be in the upper rage of say $3000 per tonne of final product. (though doubt it if the converter had no choice but to do it or close)
Then once converted they would give it back to the miner (miners agent) to sell.
An example in Galaxy's case might be $325 per tonne, $50 shipping per tonne.. total $3000.
Conversion using the $2500 to keep all even... Gives a final cost for one tonne of lithium at $5500 and a profit on that $13500 sell price of $8000 (up 145%)
So if all of My Cattlin was tolled using the above numbers, at the 200,000 tonnes then the annual revenue would be $337 million.
Annual profit if the margin was always $8000 is $200 million.
Lepidico wise that's all different. -kinda.
I'll probably ask that
@Welsho54 and
@maxi1981 checks what I say here as they know best about the L-Max tech.
But basically, from the stand point of material to process. It might cost them $0 to, transport costs... Maybe even a hundred or so $$$.
Their conversion process costs from memory has a high and also a low not much dissimilar to that of brine.
The conversion ratio from memory is roughly 14 tonnes to 1.
So the cost might be anywhere from their highest cost to convert with feedstock costing say $100 per tonne after purchase and shipping.
To maybe their lowest cost to convert which as I recall was down around $2000.. and no cost to buy the material nor transport if say they were local to the feedstock.
I heard an interview with Chris Reed where he stated that by processing the lithium into battery grade materials that you can triple the value, would this be a similar multiplier to expect from Galaxy/Lepidico?
Yeah that's right...
