Albemarle Corp on Tuesday called for lithium prices to remain high indefinitely to help the mining industry develop new sources of the metal for electric vehicle (EV) batteries and fuel the transition to green energy.
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Higher price demands from the world’s biggest lithium producer could fuel growing tensions between electric vehicle makers and mining companies that supply materials critical to switching to all-electric power, as metals with higher lithium prices make electricity more expensive. jeopardizing the profitability of the vehicles.
Lithium prices have more than doubled in the past year and nearly ninefold in the last three years, according to an index tracked by Benchmark Mineral Intelligence. By 2023, Albemarle expects its lithium prices to rise 40% from 2022 levels.
Albemarle supplies many of the world’s automakers, including Tesla Inc, which raised its prices last year due to rising lithium costs, only to cut prices in early 2023 as demand plummeted.
The Charlotte, North Carolina-based mining company is building new lithium facilities in Chile, Australia, China and the United States, and is considering a major European lithium processing plant, for which it plans to double its capital budget for 2027. Planning to do more. ,
“[The]price of lithium remains high enough to support the necessary incentives to take those investment risks,” Eric Norris, head of Albemarle’s energy storage division, said during a presentation of the company’s 2023 Strategic Update. “The (lithium) market is tighter than it was last year. There is a significant supply on the way, but more important is the increase in demand.”
Global lithium demand should reach 3.7 million tons by 2030, and Albemarle alone expects to supply about 600,000 tons by then. Without the expansion, however, officials warned of a “significant shortage likely” by the end of the decade without new mines and processing plants.
Its rival, lithium miner Livant Corp, has also repeatedly called on the auto industry to pay more for the white metal.
“Incentivizing the industry to fill this void requires strong pricing over the long term,” Norris said. “Stressed supply and demand conditions have meant that we have had to be more selective in the partnerships we partner with.”
However, lithium remains very profitable for Albemarle, with margins of around 65% in 2022. This figure should decline this year due to the rising cost of lithium chloride and spodumene ore – both key raw materials. -, although the company expects lithium margins to eventually stabilize at around 45%.
Albemarle, which received $149.7 million from the White House to build a lithium processing plant in North Carolina, last night posted preliminary fourth-quarter earnings ahead of Wall Street expectations and said it expected May 2023 profits and sales to skyrocket. does.
Norris, a veteran lithium industry executive, repeatedly stressed during the 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 produce it, we’re going to produce it,” Norris said.
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After rising more than 5% on Monday, shares of Albemarle were flat in the afternoon.