Everyone who knows the lithium supply chain knows well acknowledges that the Chinese government subsidies its own Lithium-Battery-EV companies to widen the industrial and technological gap with the western countries. China is in a big trade war with the west. I told here long time ago that China's main objective was not selling batteries to the West but to sell finished product which was being the EVs.
It's not only EVs they are selling to the West, they also sell LFP cells, solar panels which are very cheap, all related electrical and electronic control devices, even EV software. It's expected that the US will ban the EVs using Chinese made software soon. That will affect the major European brands like Mercedes, BMW and VW which use Chinese EV software and/or have JVs with Chinese EV software companies. Because an EV is described as "A computer on wheels" software is the most important part of it together with its battery, and those EVs collect sensitive information (!) on the roads. If the US starts that ban then that's going to be a huge impact on sales of even on European cars in the US.
Unfortunately, it looks like the saying "The Capitalist will sell us the rope with which he shall be hung” is not far from the truth. The West has made the Chinese economy strong but now tries to kill it together with its own allies.
Things at the geopolitical level are a lot more complicated than we think atm IMO. We are also getting our share from it.
Of course we will look at our own part, the lithium price. Yes it's obvious that we are fighting against the Chinese government as we are fighting "The Someone" who is getting us shorted as much as possible.
The demand for lithium from China is enormous. I can already see from the offtake agreements of Chinese companies with Australian lithium producers that the demand for lithium is enormous. I can also say the same thing for LTR's last offtake agreement with Sinomine which owns Bikita lithium mine in Zimbabwe.
We can see that in this article as well;
"
Australian spodumene producers staying the course amid low prices"
PLS- Hendersonsaid demand from Pilbara’s customers remained strong and it continued to receive inbound enquiries. “All of our customers continue to push us for product– there’s certainly no issues around any of that,.. We’re quite comfortable with what we’re seeing. We’re not seeing any cause for concern.”
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Core (CXO)still has inventory at site and Brown said while the company was not in a hurry to sell it, it would continue to entertain offers. He said the company was receiving 20-30 calls a week from potential Chinese customers but was prepared to wait for the right opportunity. “While the value of spodumene has certainly declined, the hunger for it, through those Chinese manufacturers, is still very evident,.."
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Global Lithium’sMitchell, who is also chairman of the London Metal Exchange’s Lithium and Cobalt Committee, said the company was receiving an “enormous” number of enquiries and hosted 20 Chinese parties in its Perth office in July.
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Mineral Resources, which operates the Mt Marion, Wodgina and Bald Hill mines, surprised the market last week when it reported average realised pricing of $970/t, or $1212/t on an SC6 basis, up 15% on the March quarter and above expectations.
If the demand from China is so much then WTH lithium prices are so low?
Simple stupidity!
Chinese Tianqi keeps the Greenbushes mine at full production to lower the lithium price.
The big game is being played by Chinese Gov. They are using Greenbushes resource through their own company Tianqi which controls the Greenbushes mine. Tianqi keeps the Greenbushes mine at full production (opposite to what they said before in Q4-2023 report in Jan.2023). And they sell high quality SC6 at US$1020 (ave. sales price in Q2-2024) to push the lithium price down as much as possible.
PLS is keeping the pace and in harmony with Tianqi..!
PLS is helping them subjectively by their aggressive low grade low price policies. Apparently PLS thinks that they have found an opportunity to kill the other high cost producers and they are happy to sell at low price even though they accept there are a lot of demand for their product.
However PLS must be knowing that if they sell at todays low prices then they would be shooting themselves in their own leg. Yes, they have AU$1.5b in reserves but it will melt down quickly as they will not be making any money from their sales and might be very close to making loss. I don't believe their AISC will be higher than their sales price if the spod price is getting lower than today's price. PLS's C1 cash cost is US$390 but no idea what is their AISC!
(AISC : All-in Sustaining Cost is made up of the C1 cash cost plus royalty expense, sustaining capital expense and general corporate and administration expenses).
PLS is a high cost producer company in my opinion. We know their operations for long time. They mine the dirt from 6 different pits and mix them in the process plant. That's a high cost operation. They now want to use WOF process but they are dreaming. After a lot of struggle to find out the details of LTR's WOF process (which is kept as a secret by LTR) they are now trying to make up their own WOF process. I also don't think that the WOF process would be suitable for PLS's ore. Maybe they are just mentioning about WOF to excite their shareholders.
Now we have to play the same game.
LTR must produce and sell lower grade than SC6 in these days during ramp up IMO. At least we have a huge ore stock (over 500kt ore) as you can see on the table I posted yesterday.
Therefore our guys are now planning to lower the cost by lowering the spod grade and sell easy as our spod contains very little impurities (mainly iron). It is already a favourite ore for Sinomine as we know.
Recoveries will be much higher and cost will be much lower if we produce low spod grade like 5.3% or whatever the buyers need.
That is only valid for our already mined and stockpiled ore though. We need to convert that stockpiled ore to spod and that spod to cash asap.
We have already started mining the high grade ore both in Kathleen's Corner pegmatite and from underground pegmatites. That high grade ore will be processed separately for high grade spod indeed. And the cost will be much lower as well as we will be processing very high grade ore.
(20min delay)