Nemaska Lithium Inc NMKEF

RE:RE:FMC deal

[Calgary_AB]

Tcheck, below post was Nov.20 2016....read it and tell me what happened to that deal...

Calgary_AB wrote: I would so want to read this contract....I am sure is 300 page long...

FMC did not get where they are by being stupid...they also have the money to pay good lawyers and negotiators so they can talk NMX into signing.

Does it say anywhere; by agreeing to this contract you are not allowed to sell to (list of companies) for the next 5 years after this contract becomes null?
Who is on that list? Is Tesla there? Is GMC on it?


This is what I think just happened:
FMC recognizes the threat from NMX. FMC cannot prop up production in time to ship their customers increasing demand and is afraid of losing some of their customers, they need to speed up production to keep their clientele happy. If not some of their clients may find the product they need elsewhere (NMX) if they like the product they may just buy all their needs from one supplier (NMX)…FMC will get their production up but by then they have lost some clients to NMX and will be harder to get them back after they lost them especially if the clients like the product.
Solution:
FMC try to get a contract with NMX to supply the current customers increasing needs for the time being and when FMC production is up and running do not renew the NMX contract unless they rewrite it to FMC total advantage (meaning no profit for NMX = Walmart style).
FMC kept their clients and even get more give some profit $ to NMX so they survive and when they no longer need them start dictating new contracts or else…

Calgary_AB wrote: I think the reason this deal didn't make a splash is because FMC is also a Lithium producer, therefore NMX will not capitalize on getting the best margin possible...NMX just became a wholesaler, actually worse than a wholesaler.

I would be careful with deals like that, depends how the contract reads, was it published yet?
is NMX going to make any profit at the end of the day?

Simple explanation:
case 1. - NMX signs a deal with battery manufacturer:
- cost to produce lithium = $100
- sell to baterry factory = $150
NMX Profit = $50

case 2 - NMX signs deal with another producer AKA - FMC
- cost to produce = $100
-sell to FMC = $120
-FMC sell to battery factory = $150
NMX profit = $20

there is more potential downside and risk to this...big fish always trying to manipulate the small fish that threatens to become big. Smart big fish does something about it that on the face of things looks like helping the small fish but behind the closed doors are hours and hours of planning.

In business (any business):
- never commit too much to one costumer, if you do, the one customer will dictate your business.
- have multiple smaller customers ideally less than 20% of your business
- the once that have 20% (in NMX case should be battery manufacturers not another producer)
-have lots of smaller once that are only 5% of your business, they make the best possible margin for the company due to small volume they buy.

If Lithium is going to be in such demand why not dictate the contracts you sign?
I personally would not sign a contract with another producer unless I get full price for the product. By giving a deal to your competitor, you are letting the competitor get the upper hand and you have no product to ship to the actual customer (battery makers)
If FMC cannot produce and need more raw material I would be happy to those news...I'd say to FMC = send your customers over, I will supply them... what will happen when FMC ramps up their production and no longer need NMX?

Walmart is good at that, they take 90% of a factory production, then they dictate the price, as a factory that already invested in the raw material and labor cannot afford to fight with Walmart and are happy to get your cost and a little profit out... Walmart ends up owning you without actually buying you out. True story, I know factories in China that I am very close to...they can't take any other customers because of capped capacity and they can't lose Walmart because of secured income to pay their bills.


... and that is the reason why SP is hanging on and didn't splash....just another proof of management incapacity...but we are yet to read the actual contract.

when you sell to your competitor, you are helping him stay in business while you make ends meat to survive.