I agree with you in the asking of the question. Why?
A vertically integrated company in the lithium market would have a substantial competitive advantage as the price of the raw materials start to rise.
You still need to be any expert in battery manufacturing otherwise that competitive advantage dissapperas very quickly. I read all of this as they are actively exploring the possibility, but why now?
Is this the best way to invest the companies financial and intellectual capital? I am not convinced... yet.
It is not an impossible or improbable strategy. Hell, Samsung started out as a textile manufacturer (yes they got stacks of government support to be what they are today), but anything is possible.
I am not sure about an additional risk premium, but would like more information from the company on why this is such a big idea.
Other options maybe should be looking at what other minerals they could process through the factory or maybe go out and find some more.
KISS - not many companies vertically integrate well.
DYOR,
GXY Price at posting:
55.1¢ Sentiment: Hold Disclosure: Held
