Producers of the white metal cranked up production last year amid forecast of increased demand from EV makers going into 2020. Covid-19, however, slammed the brakes on the electrification revolution and dented global car sales.
Albemarle’s Kemerton and La Negra expansion projects are expected to be commissioned in 2021 with sales beginning in 2022.
Albemarle sold $747 million worth of lithium in the three months to Sep. 30, a 15% drop from the same quarter last year, but said the result was in line with what expected.
As a result, the company is forecasting full-year net sales to reach between $3.05 billion and $3.15 billion.
Albemarle has periodically reviewed its expansion plans over the past 12 months. A year ago, it postponed a project to add about 125,000 tonnes of processing capacity.
It also revised a deal to buy into Australia’s Mineral Resources’ (ASX: MIN) Wodgina lithium mine and said it would delay building 75,000 tonnes of processing capacity at Kemerton, also in Australia.
The lithium giant showed further signs of distress in May this year, cutting its 2020 budget and pulling its annual forecast amid the spread of covid-19.
It followed such decisions with a temporary suspension in August of two of its lithium facilities in the US. The measure affected portions of the Silver Peak lithium mine in Nevada and Kings Mountain lithium hydroxide production facility in North Carolina.
Albemarle said at the time it would restart the idled output in early 2021.
Before the pandemic, the main factor behind the price slump was an avalanche of new supply. The glut was triggered mainly by mine expansions and a cut in government subsidies for purchasers of EVs in China, the world’s largest market.
Not worried about Chile’s new constitution
The company, which has key operations in Chile’s Atacama desert, said on Thursday it didn’t expect the country’s new constitution to affect its lithium rights there.
Chileans overwhelmingly approved last month a bid to scrap the charter inherited from dictator Augusto Pinochet.
“It’s not in the country’s interest to start changing how they work with the international community,” Albemarle chief executive Kent Masters said on a conference call with analysts on Thursday. “We don’t really expect it to impact our rights in the Atacama. It’s something we’ll have to watch very closely as that plays out.”
After transitioning to democracy in 1990, Chile’s market-friendly business environment, framed in part by the Constitution, attracted foreign investment. The country grew consistently and saw poverty go down. This came at the cost of an acute concentration of wealth and growing inequality.
Last year, the United Nations Economic Commission for Latin America estimated that nearly a quarter of total income goes to 1% of Chile’s population.
The drafting of the new constitution is expected to take years, as voters need to choose first a committee in charge of writing the new charter.
Chileans are scheduled to vote in 2022 to approve or reject the convention drafts.
Albemarle is facing other challenges in Chile, as it is locked in a feud with regulators over how it calculates its reserves of the ultralight metal. The outcome of this dispute could impact the company’s plans to ramp up production.
