Thanks Dyno, lots of food for thought there.I still struggle...

Thanks Dyno, lots of food for thought there.

I still struggle with the concept that we let China conduct/calculate a number of lithium indexes, which become reference points for contract pricing where the physical product may not even head to China.

Maybe it is my ignorance, but I have never seen how the various lithium indices are constituted and purport to work. How do they deal with product < 6% in the case of spod, or product of dubious quality? How much of the actual market volume flows through the index?

How do they deal with China itself which has a clear conflict of interest, and would no doubt subsidise some production in order to reduce the index price, for the greater benefit of reducing total lithium costs?

Perhaps drawing on OPEC lessons, the lithium suppliers of the world need to create and conduct their own indices, and work with a body like the London Metal Exchange, so there is transparency in what an index every day actually means.

Obviously, we would want to see a deep and reliable spot marketplace, before giving it any credibility longer term in contracts that make reference to such prices.

And in the case where specific country sources, or ESG principles, are fundamental to demand, separate indices would be required.

In the shorter term, I do think LTR itself, and not PLS, should conduct regular transparent auctions for a proportion of its output, as a means of obtaining price discovery. Perhaps we should do this for a small maiden shipment, say in August!

Lots of questions.

Am tempted to be quite positive about index prices this last month, but that is only human, and I now have a real disdain for Chinese lithium indices, and the volatility that flows, until convinced otherwise.

I suspect some guys at Wood MacKenzie are having similar hollow feelings in the stomach right now!