Albemarle calls for high lithium prices to fuel EV industry growth

Albemarle calls for high lithium prices to fuel EV industry growth
Albemarle calls for high lithium prices to fuel EV industry growth

Jan 24 (Reuters) – Albemarle Corp on Tuesday called for lithium prices to remain high indefinitely to help the mining industry develop new sources of metal for electric vehicle (EV) batteries and to fuel the green energy transition.

Pressure for higher prices by the world’s largest lithium producer is likely to exacerbate growing tension between electric vehicle makers and the mining companies that supply crucial materials for the all-electric switchover, high prices for metals threatening the profitability of electric vehicles.

Lithium prices have more than doubled in the past year and increased nearly ninefold in the past three years, according to an index tracked by Benchmark Mineral Intelligence. For 2023, Albemarle expects the price it receives for its lithium to jump 40% from 2022 levels.

Albemarle supplies many global automakers including Tesla Inc which raised prices last year due to the rising cost of lithium to cut them in early 2023, on fears that demand could erode.

The Charlotte, North Carolina-based mining company has built new lithium facilities in Chile, Australia, China and the United States, and is considering a major European lithium processing plant, projects for which it plans to more than double its investment budget by 2027.

“(Lithium) prices need to stay high to support the incentives needed to take on these investment risks,” said Eric Norris, head of Albemarle’s Energy Storage business, during the update presentation. company strategic day 2023. “The (lithium) market is tighter than it was last year. There is significant supply coming, but the growth in demand is greater.”

Global lithium demand is expected to reach 3.7 million tonnes by 2030, with Albemarle alone forecasting to supply around 600,000 tonnes by then. Without expansion, however, executives warned of the “potential for large deficits” by the end of the decade without new mines and processing plants.

Rival lithium miner Livent Corp has also repeatedly called on the auto industry to pay more for the white metal.

“Engaging the industry to close this gap requires strong long-term pricing,” Norris said. “The tight supply and demand situation means that we have had to become more selective in our partnerships with our customers.”

Lithium, however, remains extremely profitable for Albemarle, with margins of around 65% in 2022. This is expected to decline this year, due to rising costs for lithium chloride and spodumene ore – two key raw materials – although the company expects lithium margins to eventually stabilize around 45%.

Albemarle, which received $149.7 million from the White House last fall to build a lithium processing plant in North Carolina, released preliminary fourth-quarter results last night that beat Wall Street expectations and said said he expects 2023 earnings and sales to increase.

Norris, a longtime lithium industry executive, repeatedly emphasized in a nearly two-hour presentation that Albemarle will produce lithium when its customers need the metal. Several smaller rivals have struggled in recent years to open new lithium mines. “When we say we’re going to do it, we’re going to do it,” Norris said.

Albemarle’s stock was flat midday after jumping more than 5% on Monday.

Reporting by Ernest Scheyder; Editing by Paul Simao

Our standards: The Thomson Reuters Trust Principles.

Ernest Scheyder

Thomson Reuters

Covers the future of energy and transportation, including electric vehicle and battery technology, with a focus on lithium, copper, cobalt, rare earths and other minerals, policy, politics , etc. Previously covered oil and natural gas, including a stay in the North Bakken Shale Oil Patch in Dakota.

. Albemarle calls high prices lithium for power growth industry vehicles electric

. Albemarle calls high lithium prices fuel industry growth

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