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There have been plenty of musings regarding Tesla Battery day IRT spodumene pricing and the offtake signed with PLL.
Generally speaking it is good to see some big Li Chemical demand numbers being touted by Tesla and there will still be a need for them to source product externally.
There may well be some cost savings for Tesla in operating their own converter, and no doubt efficiencies by controlling the output from said converter as LiOH remains a speciality chemical tailored to the needs of the cathode manufacturer (a process Tesla intends to do in house to supplement external supply).
I have noticed some commentary questioning large margins being chased by the likes of Albemarle, but to my mind it will be necessary for Alb and others with access to the top global deposits to achieve those sorts of margins for enough supply to satisfy global demand in the medium to long term.
Now I understand that there have been plenty of feasibility studies that have claimed world's lowest costs. Nemaska was notoriously caught out as it became increasingly apparent that paper claims are rarely reality in this industry. PLL is no exception having made their own "world's lowest cost" statements, and IMO those studies need to be taken with a healthy grain of Elon's proverbial.
I think it is important to separate some of the hopium with reality. Reality is that the latest crop of spodumene producers have really struggled to meet the on paper feasibility study cost estimates, and this includes PLS.
Now this is important because when evaluating producers in the sector it is beneficial to see where each company will sit on the marginal cost curve, and there is a real disconnect between estimated costs and what is being achieved by producers. It will be intriguing to see in several years time how the marginal cost curves pan out as the necessary new players enter real world production.
Case in point, despite having a feed grade (undiluted) of around 1.11% and a LOM strip ratio in excess of 10:1, a PLL feasibility study put their SC6 AISC pretty close to Greenbushes... for the uninitiated the latter has a resource grade of around 2.35% and very low strip ratio (2.2:1 Li only). Putting on my Elon hat, that's like having more than 2 concentrators operating on the same footprint and less than a quarter of the material to be mined.
Yes there are some apparent and claimed cost advantages to operating in their location, but their feasibility study is quite fanciful IMO.
What does this mean for PLS?
Well the PLS DFS put the S1 LOM strip ratio at 4:1 and the average head grade at 1.26%. It does also has the benefit of Tantalum credits. That is a significantly lower volume of waste material to be mined and a far superior grade. My view is that despite the claims, if PLL is to be profitable supplying Tesla with SC6 then PLS will be in an excellent position competitively.
Tesla is no charity and has a reputation for squeezing suppliers. I do not believe now would be a great time for an existing spodumene producer to be inking a deal with Tesla.
For those looking to attract attention and investment dollars for a greenfield project with a relatively marginal resource (generously described as tier 2 by sone), it obviously has it's advantages.
Seeing such interest in lesser resources is a good sign for the industry as a whole, however IMO patience will be required for a substantial rebound in spodumene pricing.