Hi All,
No longer a holder of PLS after the market closed today. Will be out short term due to something I personally see as risks remain to be 'derisked' in the future. But it's a fact that PLS is sitting on a great resource and that won't be going anywhere.
Anyways, I have been seeing some keyboard wars around hard rocks vs brines on HotCopper. So I shall share my own opinion on the subject.
Few months ago, I had a great opportunity to follow the best people in the Lithium market to China. During our meeting with BYD, someone from our team asked the question "Is there a reason why Chinese is using Lithium Hydroxide more than before?". The response we got was that because it works better with Nickel.
For those of you who don't know yet, Chinese has the technology of using a 1-step process to produce Lithium Hydroxide from spodumene. Brines could not be made into Lithium Hydroxide in a 1-step process. Not sure the exact process, but it is most likely to be, Lithium Carbonate>Lithium Carbonate battery grade> Lithium Hydroxide battery grade. Or it could be Lithium Carbonate>Lithium Hydroxide>Lithium hydroxide battery grade. By doing so, it would make the cost of processing spodumene to LiOH to be comparable with brines, or even be slightly lower, and the outcome of using spoduemene would be that the quality of the end product would be better as well.
As for the future outlook of Chinese appetite for spodumene, the battery market in China has been largely dominated by LFP, but manufacturers are slowly shifting to NMC. As of 2015, the market share of LFP is 69% and NMC is 27%. In 2016, the NMC demand is most likely to have 200% YoY growth in terms of GWh output. BYD already has 1 NMC plant coming online in 2017 with capacity of 5-6GWh, with other ones in China as well. It is a very good sign when the biggest battery manufacturer in China is leading the charge.
Of course, I am not saying that brines are bad. Because whoever has got the lithium that meet the specification in China will do just fine.
Cheers,
Crimson
Spodumene/Battery in China
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