One of the most overlooked components of the CATL relationship is the knowledge they bring. Lots of talk about 240m this and 400m that. Expansion scenarios doubling or quadrupling production. PLS or hydroxide. But no one really mentioned about the knowledge.
Vertical integration is very important for AVZ, to reduce costs. I don't think it's as easy as willing it and it will be done. Setting up a mine is one thing but it adds a whole other level of complexity as you go further down stream.
A couple years ago when Ken Brinsden was bringing Pilbara online he repeatedly expressed that a key consideration of the partnerships was knowledge. High demand for experts and low supply on the market causing issues. The best practices and knowledge about what the customers need.
So, what I am meaning to say is that I believe the CATL deal is very very good for AVZ.
There is undoubtedly a significant risk that we'll get crushed between the powerhouses going for this strategic resource. But if we can manage to navigate the politics and we end up retaining at least 51%. With our surely good friends CATL we'll end up in a good place in no time.
AVZ Price at posting:
39.0¢ Sentiment: Buy Disclosure: Held
