Albemarle Forecasts Lithium Market Rebound Amid Operational Adjustments
Albemarle, a leader in the lithium industry, has highlighted the current low lithium prices as unsustainable, reflecting broader market challenges and influencing its strategic decisions, including the acquisition of a Chinese lithium firm for $200 million. During a recent analyst briefing following the announcement of its fourth-quarter results, CEO Kent Masters expressed concerns over the profitability of existing operations and the feasibility of new projects, especially in Western regions, under current market conditions.
The company anticipates supply adjustments, such as the suspension of mining activities by Core Lithium Ltd. in Australia and potential production cuts at the Greenbushes mine, to help stabilize the market. Despite a temporary pullback in investments, including delaying the South Carolina plant and limiting work at the Kings Mountain mine in North Carolina to permitting, Albemarle is progressing with projects in Chile, Australia, and China, underscoring a disciplined growth strategy.
Highlighting the company’s robust position as one of the most efficient producers, Masters cited a significant supply agreement with BMW set to commence in 2025 and Albemarle's ability to secure prices above global indexes. With electric vehicle (EV) demand expected to surge by over 30% this year and lithium demand projected to increase 2.5 times by the end of the decade, Albemarle remains optimistic about the long-term market outlook.
Despite a softened pricing environment and a 10% to 20% expected sales volume growth this year, down from last year’s 35%, the company reassures stakeholders of the enduring demand for lithium amid the global shift towards EVs. Industry consultant Joe Lowry, known as Mr. Lithium, also shared a positive perspective, suggesting that the current price levels would differentiate between viable and non-viable projects without heralding a crisis.
Albemarle’s stock saw a 4% increase in early trading in New York, bouncing back from a significant decline over the past year. The company’s fourth-quarter performance exceeded sales expectations but revealed an unexpected adjusted EBITDA loss. Looking forward, Albemarle provided guidance under various price scenarios, estimating EBITDA to range from $1.05 billion at current lithium prices to $2.45 billion should prices return to $25 per kilogram, compared to analysts' average estimate of $1.6 billion.
