My own thought on this - although spodumene is currently in artificially short supply, it is reasonably abundant. Longer term the supply constraint will be converting capacity rather than the issue of getting material out of the ground. By starving independent spodumene converters Tianqi will acquire some of the distressed capacity before new supplies can ease the spodumene supply crisis. Expect strong Chinese participation in funding all the current crop of Australian spodumene developments. Longer term we need to watch the risk of rampant spodumene development leading to a situation such as iron ore faces now. If and when that arises, it will be back to the old story of "grade is king" and Talison/Greenbushes will win every time - nothing comes close on grade.
As for upside in ORE, yes it will be driven by lithium price, but it will also require performance - name plate output and profitability to match. And then there is the strategic material aspect - if and when the growth pipeline kicks in, it will get very interesting. Will one of the Big 5 make a move? Has TTC got a preemption right in respect of SDJ? First things first, though - output up and cash flowing (in for a change)
ORE Price at posting:
$2.45 Sentiment: Buy Disclosure: Held
