General Discussion, page-9287

I tend to agree with both the arguments put forward in the 2 posts I’m replying to.

One thing that has struck me as being unusual, is if you look at the SMM website to get the latest prices, every day it is down, there are no up days, whether it be hydroxide, carbonate of SC6. Now that is not normal, look at the chart for any share or commodity even the ones that are in steep downtrend still have up days & vice versa. Nothing goes up or down in a straight line yet lithium prices controlled by the Chinese are.

It is quite clear you cannot profitably produce from lepidolite when Carbonate is trading at 96,000 CNY (todays price) or US$13500/t

The present spot price of SC6 is US$1035 CIF China. Most Australian mines (except Greenbushes, PLS) make a loss at that price. They have to produce it, pay the royalties etc and transport it to get that price. Imagine the cash our hydroxide plants in Kwinana & Kemerton are burning at these prices while they are still under commissioning & well under nameplate. If SC6 is unprofitable at these prices Lepidolite is not even in the ball park.

Why are the Chinese doing this?

IMO with a fair bit of supply coming on this year (ourselves, LTR, Wesfarmers Mt Holland + the expansions etc) they can absorb the loss making lepidolite and still get to import SC6 very cheaply at the same time putting a lot of pressure on any conversion or battery plants being built outside China. Imagine trying to get funding to build a hydroxide plant in this environment. But of course this is not sustainable, eventually market pricing will dominate. The question is - How long can they keep prices down for?

The Chinese need the raw materials, they can’t buy hard rock assets in Australia or Canada - the 2 hot spots for spodumene, S American brines are limited & slow to bring on, that leaves Africa. They already have all our stage 1 offtake and 70% of stage 2. FL1 have a good discovery close by us which could be another Goulamina sized resource. Africa might be their last frontier, the Chinese are not very active explorers, I’d be keeping a very close eye on any Chinese involved M&A in Africa.