Albemarle (NYSE: ALB) is betting big on lithium, having just unveiled plans to build a state-of-the-art plant for the testing of its direct lithium extraction technology.
The business has proprietary technology in place and is building pilot plants as it seeks to create new projects right at the cutting edge of lithium production, according to Albemarle chairman, president and CEO Kent Masters on the company's latest earnings call. "It is a new technology, and we're going to make sure we do it right" added Masters.
Direct lithium extraction success could revolutionize the industry, as the technology has not yet been implemented in large-scale commercial operations but it’s theorized that it could improve yields significantly.
The company has been making major moves in lithium over recent months, including its recent CAD$109m strategic investment in Patriot Battery Metals (CVE: PMET). The proceeds from the deal, which secures around 4.9% of PMET’s issued and outstanding common stock, are expected to accelerate the development activities at the Company’s Corvette Lithium Project.
Another important move is the company’s landmark agreement with Ford Motor Company (NYSE: F). The duo are aiming to strengthen American electric vehicle (EV) supply chains, with Albemarle Corporation (NYSE: ALB) becoming the battery-grade lithium hydroxide provider for the automotive giant.
The five-year agreement, which kicks off in 2026 and spans through 2030, will see Albemarle delivering more than 100,000 metric tons of the critical component for approximately three million future Ford EV batteries. This strategic alliance is expected to bolster Ford's EV production plans significantly.
Both companies have committed to prioritizing the domestic U.S. EV supply chain, sourcing lithium hydroxide from within the United States or countries with a U.S. Free Trade Agreement. This commitment serves as a response to the growing demand for EVs and the need for regionalized supply chains, which offer increased security, sustainability, and cost-effectiveness.
Thanks in part to its massive focus on lithium, the business has also recently released positive second-quarter earnings, with 60% net sales growth compared to the same period 12 months prior. Net income of $650m meant a 60% increase, while adjusted diluted earnings per share more than doubled to reach $7.33.
Albemarle attributed its success in the period to higher prices from its energy storage and Ketjen catalyst solutions subsidiary.
Looking ahead, the business said full-year net sales are expected to rise by between 40% and 55% thanks in the most part to the continued adoption of electric vehicle technology. Meanwhile, higher energy storage pricing is anticipated to lead adjusted EBITDA to increase by roughly 10% to 25%.
The company continues to focus on expanding its global portfolio, investing in organic and inorganic opportunities, and maintaining its financial flexibility and investment-grade credit rating.
Locking Down Domestic Lithium Supplies
While established large-cap stocks present attractive investment opportunities, many strategic investors crave the excitement of disruptive start-ups. Those with an appetite for fast growth and a compelling vision.
The global electrification movement is well underway, but to see it through, the quest for domestic lithium supplies is increasingly urgent. Here, Eureka Lithium, a pioneer in the exploration of lithium in Nunavik, Quebec, is a junior stock to watch.
Indeed, Nunavik is recognized for its potential to house spodumene-bearing pegmatite deposits, suggesting this underexplored territory is highly promising in terms of its lithium and cesium geochemistry.
That’s why this region could be the next major lithium district in North America.
The company, currently listed on the CSE, has secured a massive land package in the region, giving it a first-mover advantage in investigating its potential. Importantly, Eureka’s fully-owned properties hold an amazing 12% of ALL 99% percentile Lithium Sediment samples within the entire Quebec government sediment database.
That makes Eureka a first-mover with a potent-looking land portfolio.
The notion of first-mover advantage is a powerful one in business and industry and especially so in mineral exploration, where there is a finite amount of resource-rich land. By securing early access to Nunavik’s lithium potential and becoming the largest landowner in the lithium district, Eureka Lithium puts itself in an enviable position.
If you’d rather break free from the limits of the usual market giants, an under-the-radar gem like Eureka Lithium may be worth a closer look.