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To: LoneClone who wrote (148296)	12/11/2020 1:33:02 PM
From: LoneClone	Read Replies (1) \| Respond to of 196234

Lithium: A right royalty rebate – easing pressure on WA spodumene producers roskill.com Posted 10th December 2020 in ?Industry news. By Martin Baker At the beginning of December, the Western Australian Government announced it will provide temporary assistance, effective from 1 December 2020, to three lithium producers in Western Australia in the form of a 50% rebate on spodumene concentrate sale royalties for up to 12 months. Production at Mt Cattlin ( Galaxy Resources) and both Pilgangoora operations ( Pilbara Minerals and Altura Mining) will be eligible for the relief, provided that their employee count does not drop significantly from current numbers.?According to the Government of Western Australia’s media release, this measure could safeguard more than 600 jobs. The rebate must be fully repaid to the State Government over a period of two years after the conclusion of the assistance period, with the major caveat that, should the average price of spodumene concentrate hit or exceed US$550/t for a given quarter in the next 12 months, the rebate will not be provided, and royalties must be paid in full. Roskill View The royalty rebate provides support consistent with Western Australia’s “Future Battery Industry Strategy” in the form of a temporary prop to Australian hard rock lithium miners during a testing few years, which have seen spodumene concentrate prices drop from US$935/t in July 2018 to US$375/t in October 2020 (5.5% Li2O, CIF Asia). This low-margin market has put pressure on producers with operations such as Albemarle’s and Mineral Resources’ Wodgina mine, Alita Lithium’s Bald Hill mine, and more recently, Altura Mining’s Pilgangoora mine, being placed under care and maintenance. Royalty cost changes at lithium mineral producers, 2020-2021 Roskill’s analysis of the impact on predicted royalty costs for the affected producers, shown in the graph, indicates that the relief is felt greatest by Galaxy Resources at its Mt Cattlin operation, who will experience an estimated 27.0% reduction in its total royalty costs. The difference in the expected impact on each asset of the royalty rebate reflects the variation in royalty agreements that each producer has with the state and local bodies. In each case, these producers pay a 5% state royalty on net revenue, from which the rebates will be deducted. However, royalty structures differ between producers. Altura Mining pays higher private royalties than Pilbara Minerals, hence the reduced effect from the planned royalty rebates, whereas Galaxy Resources pays no native title royalties but does have an obligation to pay Lithium Royalty Corporation AU$1.50 per tonne of ore processed. Roskill estimates the total value of royalty relief from these rebates to be approximately AU$14.97M (US$9.85M)?over 2020 and 2021, as opposed to the Western Australian Government’s prediction of over AU$20M (US$13.2M). This is likely due to a discrepancy between Roskill’s and the WA Government’s view of spodumene production over the period. Roskill’s NEW?Lithium Sustainability Monitor?is designed to provide clients with an in-depth understanding of lithium supply chain sustainability and its crucial role in the transition to a low-carbon economy. For more information,? click here. Roskill’s?Lithium Cost Model Service?is designed to provide miners, financial institutions, governments, and other industry stakeholders with an in-depth understanding of the costs involved throughout the lithium supply chain; for more information,? click here. Roskill’s?Lithium: Outlook to 2030, 17th Edition?report was published in August 2020 and includes full analysis of the impact of COVID-19 on supply, demand and prices, as well as profiles of the main producers.? Click here?to download the brochure and sample pages for the report, or to access further information. Contact the author This article was written by Martin Baker. Please get in touch below if you wish to discuss further: Contact the author