Lucrative times for lithium giant Albemarle

Albemarle, the world’s biggest lithium producer, has confirmed the fabulous returns from the present boom that the likes of Allkem and Pilbara Minerals hinted at last week in their latest quarterly reports.

In an update ahead of its big investor strategy day for 2023 this week, Albemarle revealed estimated sales and earnings data (unaudited) for the 4th quarter and for all of 2022 that confirmed the surge in revenues and earnings evident earlier in the year, continued until the end of December.

While Allkem has a lithium hydroxide production side to its business and Pilbara Minerals (so far) is mostly a spodumene producer and exporter, Albemarle has a ‘full service’ operation producing both metal and ores, mostly located in Australia, China, the US and South America.

“We delivered record results in 2022, exceeding our previous projections, and our updated outlook and long-term targets reflect further growth acceleration,” Albemarle CEO Kent Masters said in the release.

Albemarle said net sales for 2022 will end up in the record range of $US7.29 billion and $US7.35 billion, more than double 2021’s previous annual record $US3.328 billion.

Net income will be significantly higher – in a range of $US2.622 billion to $US2.712 billion, many times more than the $US123 million in 2021 (which was reduced by a big write down in the value of other non-lithium assets by the company.

Adjusted EBITDA for 2022 will be in the range of $US3.44 billion to $US3.49 billion, compared with $US871 million in 2021.

The early figures (the full audited release is due February 15) for the 4th quarter show net sales up more than 190% from the 4th quarter of 2021 to a range of $US2.590 billion to $US2.650 billion, net income in the range of $US1.107 to $US1.157 billion, and adjusted EBITDA in a range of $US1.210 billion to $US1.260 billion (or more than 400% better than the same figures for the 2021 final quarter).

A breakdown of where the earnings came from (Albemarle also has non-lithium chemicals it produces) was not given in the brief update.

In Australia, Albemarle is in a JV with Mineral Resources (in WA in the Pilbara) and involved in the Greenbushes mine near Esperance in the south of WA and lithium refineries at Kemerton, in southern WA.

Albemarle’s presence in Western Australia extends beyond the Kemerton Strategic Industrial Area. It also obtains lithium through hard rock mining via our 49% interest in Windfield Holdings Pty. Ltd, which directly owns 100% of the equity of Talison Lithium Pty. Ltd., a company incorporated in Australia (“Talison”).

Talison, through its wholly-owned subsidiaries, owns and operates a lithium mine in Greenbushes, Western Australia and mines lithium ore, which is then milled and processed to separate lithium concentrate from the rest of the ore. That is in association with IGO Ltd of Perth and Tianqui of China

In addition, Albemarle has a 60% interest in Mineral Resources Limited’s Wodgina hard rock lithium mine project in Western Australia and has an unincorporated joint venture with MRL, named MARBL Lithium Joint Venture, for the exploration, development, mining, processing and production of lithium and other minerals (other than iron ore and tantalum) from the Wodgina Project and for the operation of Kemerton. Kemerton trains 1 & 2 are part of the MARBL Lithium JV.

IGO releases its December quarter and half year exploration and production figures on January 31, as well as its financial data for the December six months.

Mineral Resources releases its quarterly data for the three months to December and for the half year later today (Wednesday).

Albemarle’s statement was quietly issued on the Business Wire late Monday and had no impact on share prices.

In Australia, though, UBS got all frothy about lithium, which sent the shares of some leading groups higher. For example, Pilbara shares rose to $5.08, up more than 5%, Liontown shares were up 4.7% at $1.76, despite revealing a nasty cost overrun on its big Kathleen Valley, WA lithium mining project and Allkem shares were up 3.4% at $13.80.

But the early Albemarle figures should- like Pilbara Minerals quarterly financials last week – are the real deal and underline just how well the successful players are doing.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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