Discover more from Due Diligence
A lithium deficit is looming. Albemarle could bridge the gap.
Expansion projects are underway for ALB.
Good morning, investors!
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Without further ado…
Lithium batteries are very “in” right now.
The question is, are they merely a trend that’s susceptible to disruption or permanent fixtures within manufacturing industries?
Here’s McKinsey’s take on the matter:
Another question that arises is whether lithium can be substituted. Most grid storage applications have a queue of more or less developed technologies that could do the task: vanadium redox flow, zinc air, sodium sulphur, sodium nickel, and so on. However, there is currently no substitute for lithium to meet the demands of the mobility sector. The only potential alternative is sodium ion, which, when fully ready for use, will only be able to tackle low-performing applications. Given the foregoing, there is little risk of lithium demand decreasing by 2030. [emboldened for emphasis]
That’s good news for lithium fans (and mining operators, battery makers, EV manufacturers, etc.) because demand for this precious metal is expected to surpass three million tons by 2030, outpacing supply and creating a notable deficit.
So, who’s going to bridge the gap? What current projects are either in development or pre-development phases?
No single company could possibly address the entire supply shortage, but perhaps the best-positioned American mining operator is Albemarle Corp.
Albemarle recently secured approximately $150 million from the Department of Energy via the Bipartisan Infrastructure Law, supporting the company’s commercial-scale lithium concentrator facility in Kings Mountain, North Carolina. It’s also in the process of developing a “mega-flex” lithium conversion facility, which will convert spodumene concentrate into battery-grade lithium.
Here’s more color from a press release:
The mega-flex conversion facility is expected to eventually produce up to 100,000 metric tons of battery-grade lithium per year to support domestic manufacturing of up to 1.6 million EVs per year. Albemarle is finalizing the site selection for the mega-flex conversion facility in the southeastern United States. That facility design would accommodate multiple feedstocks, including spodumene from the proposed reopening of the company's hard rock mine in Kings Mountain; its existing lithium brine resources in Silver Peak, Nevada, and other global resources; as well as potential recycled lithium materials from existing batteries.
For 2022, Albemarle’s lithium conversion capacity is expected to be 200 kilotons per annum (i.e., 200,000 tons). That said, by 2030, Abermarle’s annual capacity is projected to reach 450,000 to 500,000 thanks to in-development expansion projects as well as joint ventures in other countries like Australia, China, and Chile.
Add $ALB to the list of lithium stocks to watch.
Three Eye-Opening Tweets
And finally, we close with three eye-opening tweets.
LKAB, a Swedish mining company, finds the largest known rare-earth deposit in Europe.
Oh hello, Tesla.
Too true for many investors these days.
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