Albemarle Posts Positive Q4 Results, Expects Prices to Remain High

Top lithium producer Albemarle (NYSE:ALB) saw its lithium sales increase 410 percent year-on-year in the fourth quarter of 2022, as the company renegotiated contracts and prices for lithium remained at high levels.

Lithium net sales reached US$2.06 billion, an increase of US$1.66 billion compared to the same period last year.

"Our outstanding 2022 results demonstrate our durable advantages, particularly in the growing lithium market," Albemarle CEO Kent Masters said in the report. “Our growth potential extends well beyond the current EV opportunity.”

For 2023, energy storage net sales are estimated to range between US$8.3 billion and US$9.8 billion, with volumes projected to be up 30 to 40 percent compared to 2022. Pricing is also expected to increase, up by 55 to 65 percent.

Albemarle owns lithium brine operations in Clayton Valley near Silver Peak in the US, as well as in the Salar de Atacama in Chile. The company also owns a 60 percent stake in the Wodgina hard-rock lithium mine in Western Australia, as well as a 49 percent stake in Talison Lithium, which runs the massive hard-rock Greenbushes mine.

The company’s Australian Kemerton I conversion plant is operating and producing lithium hydroxide, which remains subject to customer qualification, while Kemerton II is progressing through commissioning.

As demand for electric vehicles continues to increase, the company is expecting global lithium demand to hit 3.7 million metric tons (MT) by 2030. Albemarle is estimating it will have between 450,000 and 650,000 MT per year of resource lithium capacity by then, with its conversion capacity reaching 500,000 to 600,000 MT per year.

"(Lithium) pricing needs to remain elevated in order to support the incentives required to take on those investment risks," Eric Norris, head of Albemarle's energy storage division, said during the company's strategic update presentation in January. "The (lithium) market is tighter than it was last year. There's significant supply coming on, but the demand growth is more significant."

Last October, Albemarle secured nearly US$150 million from the US Department of Energy to build a commercial-scale lithium materials processing plant in Kings Mountain, North Carolina. The funds are part of US$2.8 billion in grants awarded by the Biden administration for the development of electric vehicle battery manufacturing facilities in the US.

Before the end of 2022, Albemarle acquired a location in Charlotte, North Carolina, where it plans to invest at least US$180 million to establish the Albemarle Technology Park. The facility will be designed for novel materials research, advanced process development and the acceleration of next-generation lithium products to market.

In Q4, the North Carolina-based company posted net sales of US$2.6 billion, an increase of 193 percent. Meanwhile, Albemarle’s full-year 2022 net sales of over US$7 billion more than doubled the company’s results from 2021.

On Tuesday (February 14), Albemarle’s rival Livent (NYSE:LTHM) also posted positive Q4 results, saying it expects higher sales volumes this year.

As of 9:00 a.m. EST on Thursday (February 16), shares of Albemarle were trading at US$272.79.

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Securities Disclosure: I, Priscila Barrera, currently hold no direct investment interest in any company mentioned in this article.