Compelling opportunity, page-68

This was a theme constantly brought up about 12 -18 months ago that it’s all about lithium hydroxide and brine as it goes to carbonate first is at a disadvantage as it will be more expensive as it requires an extra step to get to hydroxide . People sprouting that were pushing a very simplistic narrative of how Ev penetration would roll out globally .

Hydroxide is needed for higher density batteries ( higher nickel content ) as it leads to longer klms but ncm batteries are a lot more expensive to manufacture . The narrative being pushed at one point was high Ncm batteries would become 80 % of the Ev market . This is more relevant to markets like the Us which is why Tesla is pushing this way . But in countries like China which has much lower disposable incomes and it’s a mass market , it’s about price of the final product which means getting cost down to capture market share . This is where Lfp batteries come in and for cost reasons will dominate particularly in high population density places where commutes required will be smaller , hence higher density / longer range batteries most consumers simply won’t need. In my view a big chunk of the European market will likely for this reason too also favour lfp . The point is , it’s not all going to be high density and hence hydroxide. That’s ignorant of the likely differentiation required in the demand side of the market to really grow adoption and uptake , particularly with something like vehicle manufacturing where economies of scale are vital to getting the whole cost structure down .

With Lfp you won’t get density and mileage but it’s a much cheaper battery to produce . Likely high nickel content batteries won’t even be above 50% of the total Ev space so the idea that hydroxide and hence spodumene will be the preferred source or modality of lithium raw material isn’t going to quite play out that way in the real world .

The beauty of carbonate is its much more chemically stable and as the original post suggested , it’s more flexible too , you can go either way , with it still being capable of being pushed to hydroxide if needed. Being also more chemically stable , also means you can also store it much easier than hydroxide. This is no small thing for a chemical / battery manufacturer.

Also when it comes to cost curves not all players are identical . The spodumene cost curve blows out quickly and not all spod mines are anywhere near greenbushes in aisc . Better producing carbonate operations from areas like hombre Muertro could be in fact price competitive to hydroxide even with an additional step from carbonate because their aisc for carbonate is so low .

I have also read that some chemical manufacturers prefer making hydroxide from carbonate as the impurities are all gone if your starting point is a high grade carbonate, making their process flow sheets much easier to implement consistently . All of this indicates there being plenty of space in the sun for carbonate supply in the future along with hydroxide and n my view carbonate will likely form the baseline for most ev supply that goes into cheaper ev offerings which is where the mass market and the biggest uptake will be . But as they say DYOR.

pf