There’s a lot of value being assigned to those by various people down there in Australia and so a little challenging to me, to be perfectly honest, to know where the Australian M&A market plays out, and therefore what opportunities are going to be available to us, but we absolutely want to have a significant mining presence in Australia and that will almost certainly mean that we have to get pretty aggressive with our strategy of acquiring new assets over there at some point post-close.
Pavel Molchanov: Okay, following up, thinking about live and standalone, your capital program this year is at a record level, $350 million at the midpoint. Directionally, how much higher will that be in 2024?
Paul Graves: I can take that, Paul. Yeah, I think for next year, as a live and standalone, we’ll be a slightly lower level than we are this year.
Pavel Molchanov: Okay, that’s really helpful.
Gilberto Antoniazzi: But if I could maybe just add a comment to that though, because I think it’s an important point. Of course, it’s important to know what the capital investment that we have. I think you’ve seen the balance sheet that we have today is pretty solid. You see the cash flow that we’re generating today. We look into 2024, and when we look at the volume increase that we have coming, when we look at the amount of our portfolio that is already either locked in and agreed pricing with customers, or is structured in such a way because of the way we price it off input costs, where the profitability is pretty stable, pretty predictable, pretty clear. We’re expecting cash flow to continue to grow in the future. If market prices stay exactly where they are today, right now, for all of next year, it’s hard for me to imagine a scenario where our internally generated cash flow, our EBITDA, does not climb next year because of the way we structured our business and the way we’re going about taking our product to the market.
Operator: We go next now to David Zhang at CICC.
David Zhang: Good afternoon, foreign team. This is David Zhang from CICC. Thanks for taking my question. Our first question is that, given that compared to your original plan, it may take more time for your carbonate from Argentina to catch up with your lithium hydroxide expansion. So how would you utilize these new hydroxide capacity? Would it be possible to do something like toll treatment or it is necessary to wait until your new carbonate volume from Argentina is online?
Paul Graves: Good question. I don’t think tolling them is a sensible option for them. I’m not quite sure who we would toll for. It would require somebody with excess carbonate, but that is maybe to make commitments in hydroxide that they can’t meet and are therefore looking for someone to toll for them. Also not frankly a business we want to get into. The tolling business is not our business. Could we purchase third party carbonate and use that third party carbonate in those plants? Maybe. The challenge with that, frankly, there’s a couple of challenges. One of them, we found the supply very unreliable. People will supply us carbonate when they’ve got excess carbonate, want to move it. The minute they can shift it somewhere at a higher price, they either jack our price up or they won’t and we don’t price up markets, so the economics are a little complicated for us to be certain of.
But the second thing, just as important, our customers have pretty rigorous qualification processes. And if we produce hydroxide from carbonate, if we change that carbonate, we have to requalify it. These are not plants that necessarily lend themselves to switching supply very quickly. We can, of course, and we will, and have in fact qualified more than one source of carbonate, but you have to have a lot of confidence that that carbonate’s going to be there to go through that process. I think frankly, our expectation is that we will, if we’re not running them flat out on day one, we don’t run them flat out on day one and we wait for both the carbonate to be available and the appropriate customer contracts to be in place before we start producing them.
David Zhang: Yeah, thank you, Paul. Crystal clear and a quick follow up on your fixed price contract of lithium hydroxide. Will we still expect some price reset again by the end of this year?
Paul Graves: Yeah, we don’t actually, I’ve got to be careful with the terminology. We don’t actually have any fixed price contracts anymore. All of our contracts have moved to market-based pricing. That does not mean daily, monthly, weekly, whatever, pricing against an index in most cases, but we do have a structure with our customers where it either is mechanically predefined. So we know exactly where the price will go relative to market prices. Or we have the opportunity to sit down with them as we’ve done last year and we’ve done again from 2024 and say, let’s agree on a price for 2024 based on market conditions and that will be the price at which we sell you in 2024. We’ll continue to explore those opportunities, but frankly, as our portfolio grows, as we have more material available and probably more contracts that are truly market-based, we’ll continue to value even more some of the fixed agreements, annual fixed agreements, which really kind of hark back to how lithium was priced six, seven years ago to help bring some predictability to our earnings profile.
So we will continue to do that. I think you’ve seen from the data, the over cycles, we’re not leaving value on the table from this approach, quite the opposite. We actually think that by having more predictability and ultimately premium pricing over volatile market prices, we’re actually generating more value from this strategy, even if in any given quarter, you might see things a little differently from the outside.
David Zhang: Understood, that’s really helpful. I’ll pass it on.
Operator: And ladies and gentlemen, it appears we have no further questions today. And Mr. Rosen, I’ll hand things back over to you.
Daniel Rosen: Great. That’s all the time we have for the call today, but we will certainly be around following the call to address any additional questions that you may have. Thanks everyone, and have a good evening.
Operator: Thank you, Mr. Rosen. Ladies and gentlemen, this does conclude the Livent Incorporation third quarter 2023 earnings release conference call. Thanks for joining. You may now disconnect.
