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Gold/Mining/Energy : Rare Earth Elements and Exotic Metals

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To: LoneClone who wrote (16574)11/19/2019 2:51:11 PM
From: LoneClone  Read Replies (1) of 17122
Lithium: Livent discloses 4kt hydroxide stockpile following recent MoU with LG Chem

Posted 18th November 2019 in General News.
By Dominic Wells

During Livent’s Q3 2019 results call on 6 November, CEO Paul Graves disclosed that the company would be carrying a 4kt stockpile of lithium hydroxide into 2020, roughly a quarter of annual production, in order to guarantee meeting customer demand. Livent currently produces lithium carbonate at its Fenix facility in Argentina using feedstock from the Salar del Hombre Muerto. This carbonate is then almost entirely used for hydroxide production, with only small volumes of carbonate being marketed externally, before being sold to Chinese consumers. Livent has also been buying third party carbonate to supplement feedstock sourced internally since 2018, though it is aiming to match hydroxide and carbonate capacity in 2020. The stockpiling announcement comes shortly after Livent announced on 5 November, that it had signed a Memorandum of Understanding (MoU) with LG Chem to provide the company with lithium hydroxide in 2020.

Roskill ViewLivent has stated that low Chinese hydroxide prices in Q4 2019 are unsustainable “in the face of rapidly rising demand from high nickel battery applications” and expects a steady increase in prices during 2020. In addition, the decision to store hydroxide into 2020 shows a preference to deliver material to established off takers rather than to the spot market.

Roskill expects that most companies involved in the Chinese automotive battery industry will continue to rely on low nickel chemistry cathodes (<60% Ni) such as NCM 523 during 2020. Overall, most players in the Chinese cathode and battery industry lack the expertise to successfully produce battery chemistries with nickel contents greater than 60%. A number of Chinese companies with the capability to produce high nickel cathode chemistries continue to use lithium carbonate as feedstock, rather than higher-cost lithium hydroxide. As a result, Livent’s higher lithium price expectation may not be realised, as lithium hydroxide demand growth remains muted.

Alternatively, Korean and Japanese manufacturers are already capable of producing higher nickel cathode batteries commercially, with the market share of NCM 622 and NCM 811 chemistries expected to increase in 2020. The expansion at LG Chem’s Nanjing battery plant in 2020 is expected to require 3kt of lithium hydroxide by 2020 according to Roskill estimates. Livent’s recent MoU with LG Chem indicates that some of its 4kt hydroxide stockpile for 2020 could be used to guarantee LG Chem’s Chinese battery operations. By 2025, Roskill expects the Nanjing plant and its expansion to require a hydroxide feedstock of 30kt LCE/year.

By delaying monetisation of its inventory and stockpiling hydroxide, Livent is willing to sacrifice short term cash flow to guarantee long term revenue streams with downstream OEMs. This comes at a time when OEMs are looking to have greater influence and control over their supply chains, highlighted by the growing number of offtake agreements between lithium producers and consumers in recent months.

Roskill’s Lithium Market Outlook to 2028 report was published in July 2019. To download the brochure and sample pages, or to access further information click here.

Roskill’s Lithium cost model service provides an in-depth analysis of the lithium supply chain, from the discovery of new mineral resources through to the production of battery grade material. This analysis is critical in the evaluation of new lithium supply, as well as in accessing the security of supply from existing sources. For more details click here.

Contact the author This article was written by Dominic Wells. Please get in touch below if you wish to discuss further:

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