Lithium insights for US equity investors

Interviews were held with a director at Washington, DC-based think tank, an SVP at an Americas lithium miner, and a former director at Albemarle. Third Bridge Forum is part of Third Bridge’s integrated research offering that also includes Community, Maps, and Primers and Tearsheets.

LATAM Lithium – Nationalisation of Chile’s Lithium Industry & Key Potential Impacts – Director at Washington, DC-based think tank

• The recent lithium “nationalisation” approach in Chile is meant to be a middle ground between outright nationalisation, (Mexico and Bolivia), vs free market principles (Argentina). 
• The ultimate form and implementation of the Chilean lithium policy is uncertain, according to our expert, given Chile’s president will likely need congressional support for certain policy items, which is not guaranteed. 
• The specialist views Argentina as an attractive lithium jurisdiction in LATAM. The policy environment is likely to be a competitive differentiator for lithium miners, they said.

Lithium Sector – Project Execution Constraints & Development CAPEX Drivers – SVP at an Americas lithium miner 

• An SVP at an Americas lithium miner told us the two biggest challenges for post-preliminary economic assessment projects are permitting and social-community issues. They said they have observed that impatience has led to poor project execution, which can lead to cost blowouts of 1.5-2 times the original CAPEX budget.
• The specialist does not expect project delivery timelines, which have elongated, to come down significantly over the next 5-8 years. Contributing factors include capital equipment lead times, which have stretched to up to two years.

Albemarle – Strategic Growth Opportunities & Execution Risks – Former director at Albemarle 

• Looking at Albemarle specifically, a former director at the company believes the two key risks Albemarle faces in expanding capacity include limited development experience on greenfield resources and balancing yield vs feedstock flexibility for conversion facilities.
• They outlined an issue of declining yield at La Negra in Chile and continued ramp-up issues at Kemerton in Australia, but believe Albemarle will execute its option to double production in Australia.
• The specialist expects lithium price cyclicality to continue and Albemarle’s sales and EBITDA to decline YoY.