The text from one of Dwayne’s tweets. The narrative from China...

The text from one of Dwayne’s tweets. The narrative from China doesn’t match the reality of supply but that doesn’t matter as they have achieved the artificially manipulated low Lithium price they desire.


Some more thoughts i had on the lithium market whilst sipping my morning coffee.Looking at the import data (posted below), these mines producing out of Zimbabwe are running at a combined total of around ~1.21Mtpa of ~SC3.9. To get the 1.21Mtpa, I’ve simply multiplied the monthly output x 12. To calculate the grade, I’ve taken the price it was sold for, $US634.09, and scaled back from the current SC6 spot price.The total nameplate capacity for Zimbabwe for 2024 is meant to be around ~2.08Mtpa (Arcadia, Bikita, Sabi Star). In 2025, its meant to be around ~2.5Mtpa with the addition of Sandawana and Kamativi. Looking at these numbers for the first time, I initially thought that obviously the Chinese were lowering production at these mines due to supply demand issues.But after looking a bit closer into who actually owns these mines, I realised that this most likely isn’t the case.Sinomine, Yahua & Chengxin all own/have interests in mines within Zimbabwe and funnily enough, all have recently signed off-take agreements with Australian producers. Sinomine is to take 100kt of SC6 from Liontown Resources over the next 10months, Yahua is to take 220kt – 400kt of concentrate over the next 3 years from Pilbara Minerals and Chengxin is to take 385kt of concentrate over the next 3 years from Pilbara minerals.So why did these Chinese companies sign these offtakes if their Zimbabwean mines aren’t anywhere close to full capacity? They are 0.87Mtpa of concentrate short?My prediction (and I could be off with the fairies here) is that the proper metallurgy test work wasn’t done on these deposits. Maybe large amounts of CAPEX are required to upgrade the plants to be pushing out a decent concentrate. Making a lithium concentrate isn’t easy and requires a lot of prior test work. If you put a DMS in instead of a flotation plant for example, it’s almost game over. There are also many intricacies with flotation plants. They are complex and not easy to run. The fact that ~SC3.9 is coming out of Zimbabwe (my estimation), there are serious processing issues.The offtakes definitely paint an interesting picture. Why not just increase production at the Zimbabwean mines? Ramp up issues you ask? Bikita has been producing spodumene for over 2.5 years and petalite concentrate for over 5 years…0.87Mtpa of concentrate is considerable. If we convert this to LCE, 870kt @ SC6:LCE = 870kt / (40.4/(6*0.85)) = 105kt of LCE missing from supply-demand tables. As stated within my most recent post, the lithium market is expected to be in a surplus of 75-200 kt of LCE per year over the next several years according to several supply-demand tables. Knocking this ~105kt off from supply makes these predictions very interesting.Next year, the difference in capacity and what is really coming out of Zimbabwe could become considerably larger. Does this mean that more supply should be pulled from supply demand tables? Cheers for reading!