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 [Music] thank you I'm Priscilla Barrera with the investing News Network and here with me today is Danielle Jimenez of Ely markets Danielle thank you so much for joining me today thank you very much Priscilla to have me here again and um we're entering the second half of the year I wanted to start by asking you about the main Trends you've seen in the lithium space so far and if your forecast for Supply demand has remained the same since the start of 2023. so um yeah they they demand or our

forecast for the year has not changed significantly um for us to be honest it was also quite surprising the reaction of the markets at the beginning of the year and this sharp price drop because we were looking at the 12-month perspective it looked to us always that it was going to be a tight Supply demand balance for the year the thing is in this industry we have seasonalities and then that played a role I think there was indeed inventory accumulations at the battery level it's the end of last year

but all in all when you make the the sum of total demand total Supply I mean they clearly for for the year at least in our models we didn't see those uh surpluses that would have Justified this this price drops um and when we look uh at what has changed in our models I would say on the demand and we continue exactly with the same forecast we had at the beginning of the year on the supply we have little by little had to delay lithium units which we were expecting to be in the market this year because of

the delays we have heard or lower production rates we've heard of of different producers all over hard rock Brands everything which is Not Unusual in this industry and in terms of prices how prices perform as as you expected I guess we've seen a little bit of rebound starting in May do you think that will continue will they remain at these levels for the rest of 2023 we in our models again we would think prices or at least we see this this tight sewer market so we think the prices will be above Montana cost of

production which today is probably in the low 30s uh will it be 40 50 60 70 uh it's harder to say but yeah I mean I don't see it as as a impossible that we see again 60 or 70 dollar price levels towards the end of the year when it comes to supply let's talk a little bit about about Supply we know South America will play a key role in the space uh going forward I wanted to ask you about the moves we've seen in Chile trying to gain more control of its lithium industry should this be seen as a risk risk or perhaps

as an opportunity for the sector at what point should investors start to get concerned or should be concerned the Italian national lithium strategy which has been outlined recently I think we have to do it look at it from two angles one is how it affects existing operations in data camera and then what happens with all the rest for Atacama what the government said is with contracts which are today in places are going to be respected which should be no surprise but uh I should be normal but but yeah okay one

year ago we were not so sure so we know skm is going to operate today through 2030 and and Alabama is through 2043. um the government also said that they want kodelco to try to negotiate an early entry with uh into both of the operations I think from Alabama's perspective with the contract expire in 2043 with what I think is limited possibilities increased production um I think it's unlikely that is if there's any reasonable agreement which can be reached between Alabama and but with sqm there could be

possibilities qm's production through 2030 is limited by by a quarter production quota they have so the government in this case could give the project a increase production quota an extension of the of the of the agreement with with sqm and by doing so it by doing so generating significant value in the form of additional incremental lithium units before 23rd and and maybe even significantly before so I think that it's value to be created and I I sincerely hope that they can reach an agreement by which

the operation can produce more lithium than the probably 240 with 1000 sqm is projecting today for um through 2030. uh no when we look at all the other resources in Chile and how how they they might be a factor of how they are affected by this uh plan or strategy I think it it has made producing lithium in Chile they uh very expensive because essentially they have said first of all we want any new project to use dle and re-injection of brands those are Technologies which are not proven more economically no technically

no environmentally I mean nobody has proven that you can re-inject brands at a high rate into a soul flood and what the effect of that is secondly they said the tax burden will be at least out of at a camera where that camera has an enormous tax burn but it's the best results in the world as well another tax burden was put in once it was put as a bargaining for an extension of a quarter so it was a different situation I think it's highly unlikely that you will want to invest in a project in TL

under those circumstances because you know already that your Coastal production including taxes will be significantly higher than any other jurisdiction in the world and third thing is that if the government damage the project to be strategic they will take 50 of it they haven't anywhere said that they're going to contribute with capital so that's a so I'm I think it is it is from a country point of view and it has been a very bad uh proposal to in the investment community right and I wanted to touch a little bit

more on uh direct lithium extraction and not you just talk a little bit about it but your your thoughts on this technology will it happen uh what should what other things should investor consider when when looking at projects using this technology the dle Technologies this is a big array of of Technologies and I think we have to to think of them separating what is brines in in Salt Lakes with maybe very low or great lithium brands in other places of the world what what I would say for for salt flats

in the Andes were there is very little water fresh water to me it's it seems like difficult that there will be any successful operation of dle Technology be set up in the next uh five six seven years and here I simply look at what sqm and Albemarle are doing they are the parties which have the biggest the more to benefit of a successful daily technology because I mean they could double triple their production Maybe imagine the amount of value they could generate if this acknowledge would work

and I as fast I can tell um they have not made any decision in that Direction although both companies have been for years studying invested out several million dollars they have teams working on it they have tried files going on so this is going to be still many years away from I would think but then you have the other brands they have you have the the Sprites in in Canada related to oil and gas Smackover geothermal brains in in North America and California and Europe well for those Technologies you haven't for

those type of friends you have no other option probably technically then you're laying how close they are to get that I think is is also uncertain uh but to put it in simple we don't have any Supply coming from the Technologies in the next five years all right and you're also a board member of Galan lithium which is developing a project in Argentina I wanted to ask about Supply from that country and what do you see as the main challenges projects in Argentina are facing today to move forward yeah

the large Argentina has has been a very attractive jurisdiction to to develop living projects a brine project we assume difference into Chile or differences of Olivia mistreated like any other metal and and that's why we see Argentina with today I think last time we covered something projects cliff and projects in Argentina I'm quite sure that by the end of this decade we will have there will be at least 10 operations producing the femini Argentina and Argentina will towards the end of the decade serpas Chile as the

asleep probably the biggest living producer if maybe the secret of China Bros Ross Moore but but basically and this is work which started not now not with the last boom all this work started 10 years ago 15 years ago even so it's not something you built from one day to the other and and until Tina did it well sisters I would on this now I can talk from a personal experience with Kalan lithium the the support you get from provincial governments to to develop is a really unbiased being chilling

and and I would say and by it like most of the jurisdictions when you think of North America or Europe where a tingly difficult tool to develop a living Minds so Argentina has done a great job on that um biggest challenges I think that's a challenge which the whole industry is facing lithium globally and that's know-how us from 300 000 tons in 20 has to grow to 3 million or more in 2030. that means that in average the yearly growth is equivalent to the total production of 2020. where do you get that know-how where are

the people the technical people who know about equipment about process about mining this type of hydrogeology modeling this is the Big Challenge in other parts of the world you have to add also permitting but I would say those are the to me the big difficulties today let's stay with the topic of uh know-how to bring projects online we heard at this conference that one of the ways the companies might get that know-how is through mergers and Acquisitions do you agree with that statement or what other

options do you think the industry has yeah indeed and I think the the merger between life and and at alchem will certainly um and now each of the of them to benefit from the know-how of the others and I would say from a prime perspective and downstream chemistry alignment has much much to to contribute to this merger whereas I'll come with their know-how on Mineral Mining and concentration will also have significantly to contribute to to to their mineral projects live in touch so I think yes it's a very good way to

um to share the limited know-how which is in the in this industry in this particular case though in this particular case because things are there um for the rest of the players those who who want to start or it is difficult to get no but I would say maybe I said rule of thumbnail for I know how so far has primarily been concentrated in interior Argentina and and I would say more in Chilean in the scrum the mineral Mining and concentration is in Australia nowhere else finally mineral refining that is concentrated in

China so if you want to develop a project a mineral project anywhere in the world you bring Australians in and Chinese in that is the team you need another topic I wanted to get your thoughts on is legislation we are approaching the one year anniversary of the inflation reduction act do you think this has been a positive move for the industry and what else could be done by governments to to help the leaking industry I think it has been positive for for the living industry in the sense that it has

confirmed uh the the that that North America or the US in particular is going into this EV Revolution at the also go at a high speed that Linda has gone so I think from that perspective for the living industry it's a fantastic news um it is also helping quite a economically in a significant way to develop all the downstream whereas for mining uh that that is that uh has not been so clear if you ask me what I would if I was the U.S government what I would do first to promote facilitate mining enough the dependence of of let

them coming elsewhere it facilitating permitting and today I don't know there are only two as far as any recall tool projects permitted in North America Canada and the US and with a pipeline of project which is huge but every come to this conferences and you see many prizes why are you permitting well the same where I was last year and and that is not good and that's where governments could help very much I think financing is not such a big constraint not such a big construct investors if

nesters need that projects can be developed they will be willing to to risk all right I need yeah it's interesting it does seem that governments are competing for to get that electric vehicle and Battery manufacturers set up in their countries so do you think uh mining will ever get that type of funding help or attention from governments again I would be very thankful if they would solve permitting problems and and let us the miners solve the financing problem because I'm sure investor will be eager to invest in

in mining if they know that one hurdle the big hurdle or one of the big hurdles they have today is is not too big all right my last question for you today is what other catalysts should investor pay attention to for the rest of 2023 that could impact this space I think I think we and this is not only for this year this is for the coming years um EV sales is something which we need to to follow that is really what is triggering all of the demand uh most of the demand um I think 2023 will also be a

interesting Year from a supply perspective because we will start seeing the first Greenfield project starting production I think after the last one might have been in 2018 so and that will also show us a little bit the reality about what how quickly or not can new projects ramp up um I would say in general there's a oversimplification of of what the challenges are to bring Supply into production so we will see this here towards the end of the year will be interesting to to compare what will was being announced at

the beginning of year what really happened towards the end of the year one one last thing also on the supply end I would say to me the biggest uncertainty on Supply medium term is Africa there's too much activity going on in Africa which we have no visibility over it primarily by Chinese companies which have been willing to take big risks in order to to secure to to understand what's going on and also to secure eventual feedstock and I would say that is probably what looking into a four or five years

perspective onwards um could change a little bit the the the supply scenario unforeseen Supply which we cannot imagine today all right Daniel thank you so much for joining me today thank you very much uh happy to be here Priscilla and hope we can catch up and see how this the year ends compared to what we were thinking today [Music] thank you for watching if you like this video make sure you subscribe to our Channel we'd also love to hear your thoughts so leave us a comment below we'll see you next time

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