Banter and General Comments, page-20

Whats coming up for the week ahead?

FMC IPO
Set to ring the bell mid week and emerge as Livent (awful name if you ask me….
Thanks @billyen for posting the prospectus.
https://www.sec.gov/Archives/edgar/data/1742924/000119312518288488/d603292ds1a.htm#toc

I’m going to read it through tonight.
Obvious connection is that SDV is on the same salar as FMC.
It will be an interesting gauge of interest in an Argentinian brine operation and the publicity as being the lowest cost producer, etc should resonate.

Albemarle have oddly said they’d low ball it if there wasn’t sufficient interest in the IPO.
Perhaps wishful thinking of them?
That is just incredibly odd of them to say that, don’t ya think? Why would they say that?
FMC have had management issues and Joe Lowry has been very critical of them.
We’ll see how it goes.

As for Albemarle I sort of interpreted it as a vote of faith in Argentinian brine coming in straight after the announcement of the Argentine export tax.
ALB have had more red and green tape problems in Chile than they would have been expecting. The royalties that Chile are demanding are more than was expected and the water restrictions potentially curtailing theirplanned expansions. Where do they now find the supply they wanted to have coming on?

Salar del Hombre Muertos (the SDV/FMC salar) offers a very high quality resource, so perhaps this was a strange gambit by them to say that they’d be up for a larger chunk than what was available as a “regular" IPO customer.
Or are they slyly offering a take over?
Or was it just a bad idea to allow the MD to get on a microphone that day…?

Regardless of how the IPO plays out, you would logically expect Galaxy to suddenly appear on the radar of any of those who were really doing due dilligence on FMC. The sale price of the northern tenements at $280m USD is a very interesting data point.
The availability of partnerships and offtake another.

Then FMC having $480m USD to work with for expansion is another detail to be considered.
A lot of obvious possibilities for Galaxy to work with FMC as partner, or offtake, processing via tolling arrangements, DSOing some brine etc.
Even without another financial player buying in that is 3 very cashed-up players on the same salar - Galaxy ($500m AUD), FMC ($480m USD) and POSCO (budgeting $1b for their SDV North operation).
Follow the money indeed..


Labor’s Renewable Policy

Coming in at dot point 5 ( "Save the Planet, wedge Liberal on energy policy and attract more votes from the Greens" ) on Labor’s new election platform means every Australian should hear the word “lithium” coming from Labor lips every day for the entire election cycle.
Discussion of other elements of their platform, taxation are irrelevant to the main point here which is that there will be considerable mileage for Labor now embracing that Lithium and the battery mineral sector is ripe for government co-investment and subsidies.

Let’s try to remain focused and put Left-Right stuff to the side. This is amazing for our sector.
Lithium has come of age and is now considered a vote-winner and a no-brainer way that Australia can do its bit for the environment and the economy.
Hopefully this can kick-start some investment in local processors, battery plants, auto plants for EVs and some timely incentives that may be just in time to provide a chance to catch up with the rest of the world, manufacturing stuff that we’d actually be good at, before we are consigned to just buying every body else’s cars and batteries. A new Australian auto industry is achievable. The people and the empty plants are all there - please somebody make it happen (or that Indian guy who saved Whyalla will come along and save Elizabeth in SA too).

US institutions and banks will recognise that its now very possible that the next Aus govt may start actually helping a sector that has got up on its own damned feet all by itself and has already proved that its massively popular. I think that should dislodge a bit of gloominess that the local retailers aren't quite understanding what they have in their hands.

Could be very good for a company in Galaxy’s position, as the sector leader in terms of experience and having the cash ready for expansion.
The next period might offer some real visibility if Labor really run the Lithium Is Good strategy - AT shaking hands with ministers etc and doing the elder statesman advisory role, while getting perhaps a first bite at lucrative subsidies and co-investment opportunities.
I know everyone is thinking about their CGT etc, but its quite possible with grandfathered policies that lithium investors already in place and going LT may get their cake and eat it too, even if disaster strikes and Bill gets to the Lodge.


Cobalt+Nickel price getting ready to bounce ?

This is my opinion and the only reason I mention something so off topic is that nickel and cobalt are 2 more indicators we have for battery, and ultimately lithium demand.
If we can not always adequately track the slightly more opaque lithium market (or do so via more disconnected or unspecific indicators like Lithium ETFs) then we can see that nickel and cobalt seem to both bottomed and bounced about the same time.
High grade nickel stock piles have nearly vanished in a short period of time.
Cobalt (and most likely any future lithium too) from the DRC is going to have a 10% strategic resource tax.
That highlights one of the main problems with allowing any one country to dominate supply and a great reason why the world needs to also have as much geographically diversified supply and processing response to the global lithium demand.
Late last week it looked like a few contracts were starting to get much higher prices than they have lately. Same for nickel.

As far as it relates to increasing demand for batteries - the big question is how much supply is now already missing from the lithium bear’s supply estimates for 2018? EV makers have been reporting shortages of available batteries at the Paris auto show.
There must be a few lithium bears upset that the new WA spodumene suppliers have not really shot the lights out with their shipping figures and slower than expected commissioning.

btw: for cobalt bears its a good idea to read the McKinsey reports which detail projects for the different battery chemistries and their cobalt requirements going through to around 2030. Chinese seem the most keen on cobalt and the govt has been willing to link subsidies to specific chemistries that seem to lock in cobalt going forward. Even if Musk manages to get the amount down in his gigafactories there will be plenty of cobalt going into Chinese EVs.
This is a good McKinsey report from June for those that want to dive in deeper.
Lithium and Cobalt - A Tale of Two Commodities
https://www.mckinsey.com/~/media/mckinsey/industries/metals and mining/our insights/lithium and cobalt a tale of two commodities/lithium-and-cobalt-a-tale-of-two-commodities.ashx

POSCO Deal to close this week?