LA Private

Albemarle’s auspicious lithium quarter: Rebounding amidst price slowdown

Another solid quarter for the world’s biggest lithium player, Albemarle, but the three months to 30th June did confirm that the company had, like its rivals, been whacked by the slowdown in prices.

Despite that, the company revealed it has significantly upgraded its sales and earnings projections for the rest of 2023 with a recovery in global lithium prices.

Rivals such as IGO and Pilbara Minerals had reported lower revenue and income from the drop in world lithium prices, though both companies’ key producing assets in WA saw record output for the quarter.

And the likes of IGO and Pilbara are both more upbeat about the rest of the year after surviving the price crunch in the first months of this year without any real impact on their businesses.

Albemarle revealed Wednesday after Wall Street trading had closed that revenue jumped 60% to $US2.4 billion in the three months to 30th June, from the same quarter of 2022.

But compared to the first quarter of this year, revenue growth slowed sharply from the 129% rate, and total revenue dropped from $US2.6 billion.

The same happened with earnings – the June quarter saw net income of $US650 million, up 60% from a year ago.

But that was sharply down from the March quarter – in fact, net income halved from the $US1.2 billion reported for the first quarter (which was up 389% from the first quarter of 2022).

Albemarle CEO, Kent Masters, said in the statement, “We achieved $2.4 billion in net sales, up 60% from the prior year, primarily driven by higher prices and volumes in our Energy Storage business.”

“We remain confident in the long-term outlook for our businesses and are increasing our full-year 2023 net sales and adjusted EBITDA outlook based on the recent increase in lithium market prices.

“Our investments in future capacity are on track, with the Salar Yield Improvement Project mechanically complete and the Meishan project on schedule for early 2024 mechanical completion.”

In the quarter, Albemarle said it had established a strategic agreement with Ford Motor Company to supply over 100,000 tonnes of lithium hydroxide from 2026 to 2030.

It also “agreed to amend the terms of the transaction signed earlier this year with Mineral Resources Ltd. (‘MinRes’) to significantly simplify operations and retain full control of downstream conversion assets” (which effectively unwound the relationship with MinRes).

Albemarle said it now expects 2023 “net sales to increase approximately 40% to 55% year-over-year, and 2023 adjusted EBITDA is expected to increase 10% to 25% year-over-year.

That’s a much faster growth rate projection than we saw from the company at the end of the March quarter when Albemarle said it expected net sales “to increase approximately 35% to 55% year-over-year, and adjusted EBITDA now expected to range from (5%) to 15% year-over-year.”

That forecast should see an improvement in sentiment among lithium producers and among investors.