Capt John, slight correction. Burwill original offtake agreement was fixed price until end of 2019, not 2020. So in actual fact, we are talking about a 1 year of revised pricing.
I personally think that the revision from fixed price to market linked pricing is a reasonable give-and-take from both sides. Firstly, Burwill was struggling with USD880/t given the significant decline in carbonate price in China. We can insist on the contract with a win-lose situation but ultimately we can't win in the long-term when our partner/customer loses. Also Burwill had helped us with a large prepayment and a good story in the beginning (2017). Yes, they have dragged us down too (2018), by not taking delivery.
At the end of the day, we wanted to change the offtake agreement terms (free some output for other customer for diversification purpose and tighten non delivery terms etc) and we need to give some back by agreeing to market link pricing. At this moment, MLP seems like a bad boy because of low carbonate price. But MLP can also give us extra revenue when the carbonate/hydroxide market turns. So, I do see MLP is not totally bad compromise. We just cannot have every piece of the cake to ourselves.
Anyway, everyone has their perspective of how it goes. I just focus on the positive end of things and don't view it as "we are getting screwed".
A40 Price at posting:
19.0¢ Sentiment: Buy Disclosure: Held
