Hi @rkadian I am not sure where Sam get's his information from as it appears to be quite contrasting to what is going on in China with the continual price increases and processors screaming out for spodumene supplies whilst very critical of companies such as Genfeng and Tianqi.
Asian's in general are excellent business people and the lithium price wouldn't be going up if there wasn't a catalyst for the event. There has been claims of market control by the majors.
The leap in lithium pricing occurred after Galaxy Resources completed the sale of Jiangsu to Tianqi which was the last threat that I am aware of by way of a vertically integrated supplier to the market. A moment of synchonicity? maybe...
Currently there are reports of spot prices down to the kilogram price as opposed to the tonne price that we have been use to seeing. For example:
In Russia the price has regularly been quoted by the kilo and Joe did indicate that it is likely to become more prevalent as the price continues to rise. But then at one point I think he mentioned the price would stabilise where it was at around $20,000 USD per tonne, but it hasn't done that and continues to rise with some reports indicating $23/$24,000 USD per tonne. Some spot prices of lithium hydroxide are around 190,000 CNY per tonne, which equates to just under $30,000 USD per tonne.
At the moment if you compare Galaxy Resources and General Minings market cap to Pilbara there is a similarity by way of what the total becomes. And; there is no doubt that Pilbara have one of the largest resources in Australia (at the moment) However, If we are comparing what General and Galaxy resource to Pilbara we would need to include the international holding the two partners hold and take into account that some of which is producing.
We would be pitting Mt Cattlin, James Bay and Sal De Vida to Pilbara's Pilgangoora.
Which has the biggest resource? Which company is producing now and is a step ahead in the game?
The problem with Pilbara is they have never had a project go through to production. Tabba Tabba was a complete failure with further development needed to be undertaken before they could supply any tantalum. Upon realising this and the fact that no one wanted to buy their tantalum, not even GAM who has a first right option they shut down indefinately.
The same could be said for Galaxy with Mt Cattlin's earlier years and also Jiangsu. Though had the lithium price risen 1 year or so earlier Tianqi wouldn't have got their hands on Jiangsu, Iggy Tan might still be in charge with a battery plant down the road from Jiangsu and Galaxy would own 100% of Mt Cattlin with no General Mining involvement.. Maybe...
The thing is someone like Michael Fotios at General Mining brings a world of experience and that experience and brought some upgrades to the Mt Cattlin plant, as well as further drilling exploration which we will hear about in the not too distant future. In a round about way Galaxy may end up way better off than it would have been had they continued along the path they were on.. But only Anthony Tse would be able to provide insight on that as he was with the company during the Iggy Tan years.
Is Pilbara's price too high? It always depends on what the market is willing to put in the hat based on a story. At this time, Walt Disney would be proud but at some point the cartoon needs to be made and that takes time. - It will be disheartening for some investors watching companies like GXY GMM and ORE continue to rise whilst PLS wait for the construction to complete, ramp up and off take. Which even once it is complete by today's standards placed spodumene at $600 per tonne and I have seen posters in their forum quote 200,000 tpa right up to 400,000. There is no clarity and wont be until the company releases they DFS middle of this year, but then they still need to build and ramp up.
Why is that spodumene price an issue. Simply put, that GXY and GMM are looking for vertical integration. They have that set down in their agreement with Mitsubishi as a goal and Mitsubishi can only buy in China and a few other countries from Mt Cattlin. Could Galaxy return to vertical integration and make Jiangsu a blip on the radar? I think so!
Even if they don't return to vertical integration Anthony Tse indicates that Sal De Vida will start with demonstration ponds of near 1000tpa of lithium carbonate, which they wont throw out in the trash, they will sell. and even if the price is $7500 which ORE have been receiving per tonne thats still $7.5 million before costs that we didn't have and moving towards a high grade and higher margin product.
Is Pilbara capable of that? Maybe... but they need to set up an arrangement with a processor, whenever I have put this to them in the PLS forum I have been flamed for even suggesting it. Today I noticed some talking about lithium hydroxide, but their company has not made any sounds beyond mining rocks where as Galaxy and General mining have and it is in their announcements for anyone to access.
With regard to the cartel question, have a look at this twitter conversation which even has the video that was on SBS The Feed recently. The conversation may come some way to answering that question.
GXY Price at posting:
38.5¢ Sentiment: None Disclosure: Held
