Good News & Bad News, page-25545

When the contract ends, customers will be pushing the proverbial uphill to find a replacement raw material supplier. My bet is they get down on bended knee and accept a new contract on terms favorable to PLS. They can jawbone prices down for a period and run down inventory. Eventually the reality of a structural supply deficit has its way and prices stabilize and possibly climb. There is no instant replacement for BQ Lithium.

You can throw your FUD around for laughs. We’ve seen and heard it all for years. Panic because prices come down to only 10 times what PLS was receiving only 3 years ago. I don’t think so.

BMX is our platform. PLS can use it how and when they like, or not at all, hence tolling 15kt to take advantage of high Nth Asia Hydroxide prices which will result in an average realised price similar to the most recent BMX price. In other words, the converter is happy to take a small margin on processing our spod, just to keep the plant in operation, PLS gets downstream margin, Hydroxide still in supply shortage, China has less product available for domestic consumption as PLS will sell ex China and it also highlights the fact China converters cannot source BQ Lithium raw material to secure supply for their own benefit.

PLS are in a commanding position. They can throw an unscheduled shutdown in the mix to reduce supply and that small reduction in supply will have enormous effect to spot prices.

Don’t fret. PLS will do just fine, IMO. Our BOD are a smart savvy bunch who know the lay of the land and how to navigate it.