Li-related News/Articles/Reports, page-8141

Thanks for that GCar.

I would be surprised if their supply contracts didn't have a cap and collar mechanism to adjust production.

In a supply contract, if price is floating so it must be production not to be caught up by volatility. This typically works both sides, protecting the producer from low prices and not forcing the acquirer to buy at high prices. The opposite happens when the supply contract is on a fixed price (eg, like in PPAs).

As said, the break point occurs when revenue minus variable costs do not yield a positive contribution towards fixed costs. I am simplifying here as start-caretake-stop costs and ramp up/down periods also need to be factored. Obviously, this is not a desirable outcome, it is just a protective measure while low prices last. That's why they are trying to bring down fixed costs as much as they can.

Simply said, I can't see Albermarle signing a contract where they agree to supply at any price without having the right to adjust production.