These are interesting graphs.

https://twitter.com/D_Jimenez_Sch/status/1561737278938140674

The evidence is building that mining lithium raw materials is where the profit margins are greatest, by far.  Much more so than refining, or further downstream in the supply chain.

Pilbara Minerals, which produces 5.5% lithium concentrate in Australia and exports to China, announced their results today and reported a whopping EBITDA margin of 68%! I expect it will be higher in the next 12 months.

Which begs the question ... if LAC was focussed solely on profitability and ROI, why wouldn't they fast track the production of lithium sulphate, and defer the construction of the refining plant. They could sell as much lithium sulphate as possible to Redwood, and export the balance to China. They could also fast track expansion of the mine to 80ktpa LCE.  The refining plant could then be built as domestic demand develops over time (i.e the build out of domestic CAM production), funded by operating cashflows.

I dont know the market price of lithium sulphate, but it would not cost much to convert sulphate to carbonate, so I would expect LAC could sell it into China for $50k/t+. The upfront capital cost would be significantly lower, and the ROI would go through the roof! As would the share price I expect.

The optics of doing this (i.e. exporting to China) may not be entirely consistent with the objectives of the Biden Adminsitration, the IRA, and the DOE Loans Office. But it would be mighty popular with me!

Thoughts?