The largest producer in the world is betting on the lithium hydroxide market, which currently records higher prices and demand than lithium carbonate produced in Chile.
The world's largest lithium producer is planning to expand production in Australia to target the purchase of a particular form of this metal, increasingly used by electric car makers.
Albemarle will stop plans to expand its production of lithium carbonate in Chile, the company said on Thursday. Instead, it will use funds for a project in West Australia producing lithium hydroxide, a rarer form of metal that is being developed and is currently being sold at prices higher than carbonates.
Global lithium global demand is expected to triple by 2025, according to Bloomberg NEF, as automakers such as Tesla are seeking to increase battery sales. Meanwhile, lithium miners struggled to meet demand and metal prices tripled in just four years.
"The challenge at this point in the cycle is that lithium companies need to increase their capital spending amid uncertainty about the price of lithium," said Chris Berry, a New York analyst and founder of the research firm House. Mountain Partners. "To enable Albemarle to maintain its market share with such a steady increase in lithium demand, the company must perform its capacity expansion plans perfectly."
Albemarle plans to increase its total lithium production in Chile, China and Australia to 225,000 tonnes per year in 2025 from 65,000 tonnes in 2017, the company said in its earnings report. Just four years ago, lithium has passed through Albemarle's least important product, accounting for 44.5% of its revenue in 2017.
On Thursday, Charlotte, North Carolina, posted mixed results for the third quarter, which led to a 1.8% drop in its stock at 1:45 pm. in New York. Capital spending rose, reaching record levels, but Albemarle did not keep its sales estimates.