Lithium miner Livent (NYSE:LTHM) inked a long-term lithium provide cope with Common Motors (NYSE:GM) final week, with the carmaker set to prepay US$198 million to the corporate.
The six 12 months settlement will see Livent provide lithium hydroxide to GM beginning in 2025, with the upfront cost anticipated to be acquired later this 12 months.
“By making the superior cost, they’re clearly giving us the dedication that we had been on the lookout for,” Paul Graves, president and CEO of Livent, stated at a Tuesday (August 2) convention name in regards to the firm’s Q2 outcomes.
The transfer by GM, which is aiming to provide 1 million electrical automobiles (EVs) yearly in North America by 2025, exhibits the rising want for automakers to safe long-term provide of lithium.
“The challenges are rising for the lithium business to develop battery-grade lithium hydroxide and carbonate provide sufficient to maintain up with important annual demand will increase,” Graves added. “Because of this, auto OEMs have gotten extra centered on securing dependable lithium provide to help their very own aggressive electrification plans.”
Livent launched its second quarter outcomes on Tuesday, exhibiting that income hit US$218.7 million, up 114 p.c year-on-year. Adjusted earnings earlier than curiosity, taxes, depreciation and amortization (EBITDA) had been US$95 million, about six instances increased than the prior 12 months.
“Lithium demand was exceptionally sturdy by the primary half of 2022. Printed lithium costs in all kinds moved increased within the second quarter amid tight market circumstances,” Graves stated. “We proceed to realize increased realized costs throughout our total product portfolio.”
Final 12 months, lithium costs climbed on the again of sturdy demand from the EV business. Up to now in 2022, costs have elevated greater than 123 p.c, in keeping with Benchmark Mineral Intelligence information.
On account of improved pricing, the lithium firm has as soon as once more revised its forecast income, which is now anticipated to be within the vary of US$800 million to US$860 million for 2022; its adjusted EBITDA is anticipated to span from US$325 million to US$375 million.
The Argentina-focused firm stays on observe to ship on all its beforehand introduced capability expansions. The primary 10,000 metric ton growth of lithium carbonate in Argentina will probably be mechanically full by the tip of 2022, and in business manufacturing by the primary quarter of subsequent 12 months. Moreover, the 5,000 metric ton growth at Bessemer Metropolis will probably be accomplished by the third quarter of 2022 and in business manufacturing by This fall.
By the tip of subsequent 12 months, Livent is anticipating so as to add one other 10,000 metric tons of lithium carbonate capability in Argentina — it will almost double the corporate’s lithium carbonate capability from 2021 ranges.
Lithium hydroxide capability can be forecast to extend, because the miner stated it expects so as to add one other 15,000 metric tons of lithium hydroxide capability at a brand new location in China by the tip of 2023.
Livent additionally owns 50 p.c of Nemaska Lithium, which is anticipated to finish all remaining work on its development plan by the tip of the third quarter of this 12 months. First manufacturing from the Quebec mission, which has 34,000 metric tons of nameplate capability for battery-grade lithium hydroxide, is anticipated within the second half of 2025.
Philadelphia-based Livent operates its lithium enterprise within the Salar del Hombre Muerto in Argentina, the place it has been extracting lithium for greater than 20 years. The lithium carbonate produced serves because the feedstock for the corporate’s downstream lithium hydroxide manufacturing. Livent can be at present producing certified battery-grade lithium hydroxide in each the US and China.
The corporate’s share value jumped nearly 7 p.c following its Q2 outcomes, up nearly 30.37 p.c year-on 12 months. Different US, Canadian and Australianlithium shares have additionally seen year-to-date beneficial properties.
As of 12:00 p.m. EST on Wednesday (August 3), shares of Livent had been buying and selling at US$25.93.
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Securities Disclosure: I, Priscila Barrera, maintain no direct funding curiosity in any firm talked about on this article.
