The world's largest producer is betting on the lithium hydroxide market, which currently records higher prices and demand than lithium carbonate, which is produced in Chile.
The world's largest lithium producer plans to expand production in Australia to target the market for certain forms of metal, increasingly used by battery manufacturers for electric cars.
Albemarle will halt plans to expand its lithium carbonate production in Chile, the company said on Thursday. Instead, he will use funds for projects in Western Australia that produce lithium hydroxide, a rarer form of metal that is being used and currently sold at a higher price than carbonate.
Overall global lithium demand is expected to triple by 2025, according to Bloomberg NEF, because car manufacturers such as Tesla are trying to increase sales of battery-powered vehicles. Meanwhile, lithium miners have struggled to meet demand, and metal prices have tripled in just four years.
"The challenge at this point in the cycle is that lithium companies must increase their capital spending amid uncertainty about lithium prices," said Chris Berry, analyst and founder of a New York-based research firm. Mitra Gunung. "For Albemarle to maintain its market share with solid lithium demand growth, the company needs to implement its capacity expansion plan perfectly."
Albemarle plans to increase total lithium production in its operations in Chile, China and Australia to 225,000 tons per year by 2025 from 65,000 tons in 2017, the company said in its earnings report. In just four years, lithium has become the least important product for Albemarle to represent 44.5% of the company's revenue in 2017.
On Thursday, the Charlotte, North Carolina-based company posted mixed results for the third quarter which caused a 1.8% decline in shares at 1:45 in New York. Capital expenditures increased, reaching record levels, but Albemarle did not meet its sales forecast.