Production expansion

Albemarle, the world's largest lithium producer, plans to expand its production capacity amid expectations of strong growth in global demand in the coming years, including GM and Ford's switch to electric vehicles. Three investment companies have upgraded Albemarle's stock rating.

Albemarle Corp (ALB), the world's largest lithium producer from Charlotte, North Carolina, is expanding its production capacity following an expected "boom" in demand for batteries from electric car and tech manufacturers. Albemarle shares are up almost 72% in the last six months, with strong gains in the last 3.5 months.

Albemarle CEO Kent Masters said the company would allocate about 90%, or $1.35bn, of the $1.5bn raised from the sale of its additional shares to lithium capacity expansion in Chile, as well as joint hard rock mines in Australia and processing facilities in China. Albemarle previously said it plans to double production at its lithium plant in Silver Peak, Nevada.

"In the long term, we expect demand for lithium to grow along with the wider adoption of electric vehicles. We are accelerating our lithium projects to capitalise on this trend and ensure a high return on investment", Albemarle said last week.

Ford Motor (F) announced last week that its passenger car range in Europe will be all-electric by 2030. General Motors (GM), for its part, plans to sell only zero-emission models by 2035.

The US market leader in electric vehicles in 2020, Tesla (TSLA) has also announced plans to achieve a 50% average annual growth in vehicle deliveries and production to 20 million per year in the long term.

Tesla CEO Elon Musk urged battery manufacturers to increase production rates. He said: "we will buy as much as they can send us".

Albemarle forecast for fiscal year 2021

This year, Albemarle expects earnings per share in the $3.25-$3.65 range, below the analyst forecast of $4.08. However, the company's expected sales of $3.2bn-$3.3bn is better than analysts' estimate of $3.19bn.

Albemarle expects global demand for lithium to exceed 1.1 million tonnes by 2025 from the current 300,000 tonnes.