General Discussions, page-20570

Thanks for that @TenX. I still believe you can do binding offtakes before FID because prices are not going to be fixed in binding contracts. They would be linked to an index.

If you look at the lithium space, LTR has its binding contracts linked to the hydroxide price and others to the hydroxide/lithium carbonate price, meaning the final price is negotiated at point of sale in relation to where those indexes are. PLS spot sales are just a straight out negotiation, whilst the long term contract sales are also linked in the same way LTR does it. So you can lock up your supply in binding agreements, whilst having prices linked to an index (and probably have an agreed formula for deriving that price from the index). It is how a lot of companies do that - long term contracts with pricing formulas in them that are linked to an index rather than a 'fixed' price. Having these tied up before FID (like the lithium players largely did) makes funding a lot easier after FID (because lenders know there is a customer and the fact FID has some key substance to it). I recognise RNU has funding available, but my point is more around the additional capex needed, I presume, for the PSG stage.

An issue here I suspect for graphite sellers, is the traditional use of graphite has been in steel production, with EVs essentially an emerging supply need, but now a very significant supply need. As most graphite is produced in China, with few producers outside China of graphite, I just wonder whether a current issue facing RNU in negotiations is what index you tie price to and how, noting not all graphite produced in China for example will be able to be used in EV battery production as quality matters. Graphite pricing for first movers, like in the lithium space, can be opaque I suspect, especially where the graphite sold is essentially to new and growing markets where the specifications can differ to what say is needed for steel production.

How RNU does its pricing will IMO impact other graphite projects seeking to supply into the growing EV market, but IMO it would be better to do this before FID. On top of that once production starts and capacity grows, RNU is in better shape to make sure the pricing formula is even better than what it might agree to in its initial contracts.

All IMO