Hi SF,
From a simplistic point of view, I think your questions are
1)how might PLS feature in Australian strategy to seek international partners for more Australian downstream processing ?
2)How does PLS grab current government and international partnership opportunities towards a five year development path ?
…And 3) how do favourite ‘actors’(on the global lithium stage?) feature?
- you mean ‘actors’ other than Chinese ones?… I may have missed your point here.
Clearly in regards 1 ) PLS does feature as Ken is one of only three lithium players (four with IGO added) on the Future Battery Industry taskforce. [ref]
But is anything likely to be functional in this (additional downstream processing) direction within five years?
Maybe not.
What might be the situation in five years ie by June 2026?
Apart from unknowns, the Albemarle and Tianqi/IGO processing plants will be up and running.
For PLS the planned Calix kiln pilot plant - if it follows the model of Calix’ European Leilac cement kiln - will be commissioned in three years - by June 2024 to be potentially followed by the go ahead on the demonstration plant two years later - ie by June 2026:
Covalent will also be producing hydroxide in Kwinana, south of Perth and diagonally ‘across the road’ from the Tianqi plant in Kwinana.
I read its’ timeline targets first production after June 2024 (assuming labour issues are resolved?).
And, for the record, I think it might now have only two customers of Kidman’s original three - Tianqi and Mitsui ….and potentially LG Chem (although that deal may not have progressed beyond the initial MOU ?[ref]).
According to the AFR Feb 22, 2021 https://www.copyright link /companies/mining/wesfarmers-tight-lipped-on-tesla-lithium-deal-20210221-p574cy……
… “Perth-based Wesfarmers confirmed some off-take agreements remained live from before it paid Kidman Resources $776 million of its half share in the West Australian project in 2019.
Kidman had struck agreements with Elon Musk’s Tesla, Japan’s Mitsui and Korea’s LG Chem, but Wesfarmers won’t go into detail on which have survived a 12-month delay on a final investment decision that ended on Thursday when it gave Mt Holland a green light.
It appears likely that Kidman’s binding off-take deal with Tesla – consolidated when top Wesfarmers executives visited the carmaker’s headquarters in Nevada after buying into Mt Holland – is one that has survived.
Kidman announced in May 2018 that it had struck an initial three-year fixed-price, take-or-pay deal with Tesla with two three-year extension options.
Other commercial terms, including price, were not disclosed….”
In the next five years PLS has already said
- It intends to sell Plantura spod on the spot market via its auction app.
-It must start paying quarterly interest on US $110m on September 2022. ($5.5m a year is $1.375m a quarter?)
- It has agreed to fund the Calix pilot plant (the European pilot cement kiln looks as if it was funded to €7.5m
back in January 2016 from that earlier link)… ie around $12 million Australian dollars.
-It has been renegotiating towards provisional pricing with at least one customer according to [Q3 2021 earnings call transcript], and maximising production to take best advantage of current spod prices.
…. And to the last quarterly it had around $112 million in cash.
Do any offtake agreements come up for renegotiation?
It has a bond note with POSCO that it might utilise to be a 21% or 30% partner in the new POSCO plant?
If I was it - looking at the next five years and beyond
- I would be wanting to keep powder dry for potential Australian operations after the five years.
Continued success in the exploration program should ensure that?
- I would be wanting to ally with the strongest possible, best, safest allies - maybe Chris Ellison and world leader Albemarle (just to keep the Aussie flavour) …. Or maybe Fortescue Future Industries which has no lithium yet?
-And I would be wanting more cash to for the pilot plant and more exploration, to pay increased wages, and to have some in reserve.
……Maybe that’s not what you asked SF, but there it is anyway as a lay person/non expert opinion
cheers
PLS Price at posting:
$1.33 Sentiment: None Disclosure: Held
(20min delay)