Albemarle says 'not impossible' to meet surging lithium demand

The lithium industry may be able to narrow the gap between tight supply and expanding market growth by 2030, even as demand forecasts continue to rise and analysts warn of a large deficit, Albemarle executives said Feb. 17.

"I think you're seeing that we're getting through some of those growing pains," CEO Kent Masters said during a call with analysts. "It is a stretch, and it does require some new technology and operating in some places where historically the lithium industry hasn't done that, but it's not impossible."

Many producers in the industry will need to successfully meet targeted milestones to fill the widening supply shortage, said Eric Norris, president of Albemarle's lithium segment.

"It does reflect a hard slog, and everybody's got to step up and execute well in order to meet that demand," Norris said.

Albemarle, a specialty chemicals company, recently raised its lithium market forecast by 30%, as it now expects lithium demand to reach about 1.5 million mt by 2025 and 3 million mt by 2030, according to Masters.

Electric vehicle sales growth is accelerating, as consumers become more energy-conscious, governments incentivize clean energy, technology improves and EVs approach pricing parity with internal combustion vehicles, Masters said.

"When you look at last year's EV growth rate of nearly 50% and the auto industry's ambitions for a rapid transition to EVs, it's easy to see why demand expectations are so bullish," Masters said. "However, meeting this demand will be a challenge."

Albemarle's lithium sales reached $404.7 million in the fourth quarter and $1.36 billion for full-year 2021, climbing from $358.6 million in Q4 2020 and $1.14 billion in full-year 2020.

The Charlotte-based company posted a $3.8 million loss in Q4, compared with a $84.6 million profit in the year-ago quarter. The company's full-year income also fell to $123.7 million in 2021, from $375.8 million in 2020.

Albemarle capacity to more than double by 2025

Albemarle expects to increase its lithium conversion capacity to about 200,000 mt/year by 2025, from the current 88,000 mt/year, CFO Scott Tozier said.

The company's production is currently evenly split between lithium hydroxide and lithium carbonate, but the output split would favor hydroxide over the coming years, according to Tozier.

The third and fourth conversion plants being developed at Albemarle's La Negra operations in Chile were now shipping product for commercial qualification and are expected to make their first commercial sales in the second quarter, Masters said.

Sales at the company's Kemerton complex in Australia are scheduled to begin in the second half of 2022.

Albemarle was "analyzing options" beyond 2025 to restart its Kings Mountain lithium mine in North Carolina and potentially build conversion facilities in North America and Europe, Masters said.