Arcadium Lithium details expansion programs, long-term targets at investor day

Arcadium Lithium provided a number of strategic updates at its inaugural 2024 investor day. During the event, the company reviewed its operating, commercial and growth strategies. The company also discussed its plans for volume expansion and provided a long-term financial view. Arcadium Lithium expects 25% higher combined lithium carbonate and lithium hydroxide volumes in 2024 and 2025 from expansion projects at Fenix and Olaroz that have already been completed, are in operation and have no further capital requirements. Arcadium Lithium outlined two waves of expansions across its large, high-quality and low-cost assets in Argentina and Canada. The first wave of four existing projects at various stages of advancement is expected to be fully completed, in stages, by 2028 and more than double sales volumes. The second wave of projects are at the development and planning stage and this wave offers the company the opportunity to increase production capacity beyond 2028 by a further 125,000 metric tons to 295,000 metric tons total. The size and quality of Arcadium Lithium’s portfolio of resources means it is not constrained in its ability to continue to grow organically. Arcadium Lithium outlined a path to an expected $1.3B in Adjusted EBITDA by 2028, subject to certain assumptions, with margins continuing to be supported by low-cost positions and multi-year customer agreements. This growth is underpinned by higher volumes from expansion, and by consensus expectations for pricing to move higher than current levels towards prices that are needed to incentivize industry supply growth. Since the January merger of Allkem and Livent creating Arcadium Lithium, the company has taken actions to drive cost reductions throughout the organization. The company said the benefits of these actions are already being seen, with post-merger cost savings coming in higher and quicker than initial forecasts. Beyond expected cost savings of up to $80M in 2024, the company now expects to deliver close to its initial run-rate savings target of $125M by the end of 2025, roughly two years ahead of plan. These savings are driven primarily by organizational restructuring, operational and supply chain synergies and a reduction in third-party and other services across the two legacy companies. The company also believes the total longer-term savings opportunity to be greater than $125M. Arcadium Lithium announced the recent signing of a memorandum of understanding, or MoU, with its long-time partner Toyota Tsusho, an initial step in providing greater flexibility for Arcadium Lithium to optimize its global integrated operating network and to contribute its production expertise to Naraha. This includes using technical grade lithium carbonate produced at Olaroz to feed the company’s existing downstream lithium hydroxide network, thus allowing more battery grade lithium carbonate produced at Fenix to be sold directly to customers. This is expected to have a positive impact on the company’s earnings and to be achievable as early as 2026.