good analysis spovend , confirms what my own modelling has been...

good analysis spovend , confirms what my own modelling has been suggesting for a while , why would you bother going to full carbonate production , maybe ever ? Especially if you factor in execution risk and the much lower level of capex required .

I have worked in capital intensive industries and the thing that really kills long run returns in these industries is what is called excess capacity which often becomes endemic . If you have multiple carbonate producers in Argentina that is a very real likelihood once we get into the 2030s. So to the extent Galan is targeting being a lower capex feedstock supplier to other chemical converters I think is a smart play as will let us become a producer with positive cashflows much sooner and with much lower execution risk .

The key here to whether this is a short run vs a long run strategy is what the Argentine authorities allow regarding export specifications. If they allow some chloride in brine exports we could be into a real winner . This won’t be easy but as you will have a host of folk putting pressure on Argentina to do more value adding at home, ie full Bg carbonate production , but reality is very likely there will be a very strong export market for high concentrate lithium chloride in both US and EU market.

The Argentine authorities might therefore see this market demand and sensibly apply a middle ground whereby chloride in brine producers pay a higher royalty than carbonate producers for the ability to export this specification abroad . That will be very tempting to a cash strapped regime that needs foreign export earnings .

This is where I am hoping Jimenez also comes into his own soon and supplies us a strategic investor / buyer that gives us access to either the Us or Eu market . For mine , recent price behaviour in China really does demonstrate if you can avoid having anything to do with China as part of your marketing strategy , you’re also on a winner long term .