Why Albemarle Will Dominate the Lithium Space for Years
When Albemarle paid $6 billion to acquire New Jersey Lithium producer Rockwood, only some understood what was in play. It seemed the company was overpaying for something that would never amount to something big. Now it’s having the last laugh as the massive investment has made it the center of attention amid the Lithium arm race.
Albemarle Big Lithium Bets
The company has risen up the ranks to become the most valuable lithium producer in the world thanks to strategic investments in small and big lithium producers. It is also ranked the third largest in the production of Lithium-ion batteries, making it a key player in the race to electrify the auto industry and produce key components for consumer electronics.
Additionally, it has played a key role in propelling Western Australia into becoming the biggest source of Lithium production in the world. It has already unveiled plans to double its capacity in the region to produce more Lithium hydroxide.
Similarly, the Charlotte, North Carolina-based company is now in the driver’s seat in the race to control the $48 billion lithium market. It’s become the go-to company for exclusive access to lithium needed to produce Lithium-ion batteries. Ford has already inked a long-term deal with the company to purchase lithium that will power more than three million electric vehicles.
Even on strengthening its competitive edge, Albemarle is not leaving anything to chance in its bid to control the Lithium market. Consequently, it has embarked on an acquisition spree as it looks to expand its portfolio of Lithium projects. It’s already tabled a $3.7 billion deal to acquire Australian Liontown Resources. If successful, the company will gain access to and control some of the world’s highest and largest hard rock lithium deposits.
In addition to acquisitions, the company is also pursuing organic growth by extracting lithium from briny water deposits instead of mines. It already runs massive operations in Nevada, Chile and Australia, whereby it refines all extracted material into Lithium Carbonate and Lithium hydroxide, which are then used to produce lithium-ion batteries. Its two-prong approach has allowed it to be at the center of efforts in the West to diversify supply chains.
Fearing falling behind China in Lithium production, the West has started pumping billions of dollars into securing key lithium supplies. Albemarle has been one of the biggest beneficiaries of the investments, having already secured nearly $150 million in grants for electric vehicle battery making. With the incentives, the company has also confirmed plans to build a Massive $1.3 billion lithium processing plant in South Carolina.
Stock Underperformance
Amid the impressive strides into becoming the market leader in the Lithium space, Albemarle stock has underperformed. The stock is down by nearly 20% from its peak reached late last year. The steep pullback comes on lithium prices cooling off after a significant increase.
In addition, the company has been in the spotlight as investors question its growth plans. The concerns stem from Albemarle’s projected revenues of about $18 billion by 2027, up from about $7.3 billion. It also expects to double its earnings.
