Whats Happening to PLS, page-60

DSO wont be viable at say $400/tonne spod con price. But it will function in the way that scrap substitutes in other metal markets. Prices go up, scrap comes into the market and demand for primary raw material falls. Primary producers lower their offers, price comes down and scrap is no longer viable. Short term supply squeeze = primary producers raise their offers and price comes up again.

A big stockpile of spod DSO can provide a ceiling and the customers know it. Primary producers can look forward to a roller coaster ride as MIN and the brines play games. Now if PLS sets up a few million tonnes of DSO stockpiles in China, it can be part of that group who set the ceiling price.

Some of the spodumene DSO ore from Pilgangoora is ideally suited to hand-sorting in China . It's not the lowest cost option given the transport, but it is lucrative at the current prices and if a suitable price participation formula can be devised it's a ripper. Remember, PLS will be losing 25-30% of its spodumene to the tailings dam (on a good day) when it ships spodumene concentrate. With DSO, it is sending 100% of its spodumene to the customer. The economics seem a little more compelling when all things are considered. There is so much more to this game than the glib univariate spider diagrams provided by brokers who have never traded or produced a tonne of anything.