One of the world’s largest lithium producers, Albemarley (NYSE: ALB), is cutting cost and narrowing its capital investment plans as it adjusts the weakness in lithium prices, even better than expected demand for electric vehicles and energy storage areas.
The Charlotte-based company reported a significant change from the loss of US $ 188.2 million, posted a year ago, the US $ 22.9 million advantage of the second quarter benefit.
While the total revenue fell by 7 percent to US $ 1.33 billion, the figure still came ahead with a Wall Street’s US $ 1.22 billion, which was influenced by the strong-to-the-affected results in its special division and disciplined cost management.
“Our job is only to work on things that are under our control, because we do not really have a clear line of vision where pricing is happening.”
Shore stated that Albemarley has reached its US $ 400 million annual costs and productivity targets, such as the supply chain reorganization and measures such as measures such as reorganization and better operation on lithium conversion and mining sites.
The company now expects to spend between US $ 650 million and US $ 700 million in capital expenditure for the whole year, which increases the US $ 700 million previous guidance by US $ 800 million.
With low cost and continuous operational execution, Albemarley said it expects to receive positive free cash flow for 2025 – until the current lithium prices, which have increased to about 9 US dollars per kg, persist.
Lithium prices are below, but demand remains flexible
Lithium prices have moved away from their historic higher in 2021-2022, when a global EV boom and constrained supply has sent the cost that is growing above the US $ 70 per kg.
But that boom promoted rapid supply growth, and by the end of 2022, the market entered a surplus. Prices have declined rapidly and now sit near levels that are not considered financially viable for many new or greenfield projects.
Despite the pricing recession, the molasses emphasized that the demand for lithium has not fallen. During the company’s earnings call, he said that this year has been performed better than expected, which indicates a strong growth in China and Europe that is offset to a more subdued American market.
“The approach in North America is low, especially due to the possible impact of tariffs in the United States and the removal of 30D tax credit in September,” said, “The US gave only 10 percent of the global electric vehicle sales, only 10 percent of the sales of the global electric vehicle.
In contrast, EV sales in China increased by 41 percent year-on-year, including 44 percent jump in recent subsidized battery electric vehicles, while Europe also saw a double-point increase.
Nevertheless, the molasses warned that pricing is under pressure. “We continue to expect the whole year’s Ebitda margin [for energy storage] Average our $ 9 per kg value landscape in the 20 percent range, ”
According to the internal analysis of albemarley, the market may return to the balance earlier next year if the current price level continues. The company said, “The development of the new project has started slowing down, while the demand remains strong.” It is estimated that the increase in demand may increase by increasing supply to 10 percent per year between 2024 and 2030.
Most of the company’s current optimism stems from performance in its integrated production and processing facilities, especially due to strong versions from the albummer’s vodagina mine and the Salar yield improvement project.
With the expectation of doubling the demand for lithium by 2030, the albummer is betting on that after the market stabilizes, operations will pay for excellence and global access.
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Securities disclosure: I, Giann Liguid, no direct investment in any company mentioned in this article is interested.
