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Albemarle Corp ALB

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Morningstar’s Analysis

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Raising Albemarle FVE to $130 on Higher Long-Term Lithium Volume, but We View Shares as Overvalued

Seth Goldstein, CFA Senior Equity Analyst

Analyst Note

| Seth Goldstein, CFA |

On Jan. 7, Albemarle announced plans to double its brine-based lithium capacity at its existing Silver Peak operation in Nevada. The operation is Albemarle's smallest lithium resource and currently produces roughly 5,000 metric tons per year, growing to 10,000 metric tons by 2025. The company also announced it was studying potential lithium production from clay-based resources in Nevada. We have increased our lithium volume forecast to account for the Silver Peak capacity expansion. The potential clay project is still in the exploration phase, so we do not include it in our valuation model. Our fair value estimate rises to $130 per share from $125 due to the additional Silver Peak volume and the time value of money since our last update. Our narrow moat rating is intact.

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Company Profile

Business Description

Albemarle is the world's largest lithium producer. Our outlook for robust lithium demand is predicated upon increased demand for electric vehicle batteries. Albemarle produces lithium from its salt brine deposits in Chile and the U.S. and its hard rock joint venture mines in Australia. Albemarle is also a global leader in the production of bromine, used in flame retardants, and oil refining catalysts.

4250 Congress Street, Suite 900
Charlotte, NC, 28209
T +1 980 299-5700
Sector Basic Materials
Industry Specialty Chemicals
Most Recent Earnings Sep 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 6,000