The recently merged company, Arcadium Lithium, announced it expects to boost combined volumes of lithium carbonate and lithium hydroxide delivered to customers by approximately 40% in 2024, reaching between 50,000 and 54,000 metric tons. This is due to expansions in lithium carbonate production in Olaroz and Fénix, Argentina, as well as in hydroxide assets in other global locations. To offset part of this increase in 2024, planned spodumene production at Mt. Cattlin will be reduced as part of cost optimization efforts at the mine, reflecting the lower price environment.
By Panorama Minero
Arcadium Lithium reported it is significantly increasing its volumes during 2024 as a result of previous multi-year expansion investments. However, given the current market conditions, the company expects to reduce short-term capital expenditure commitments while evaluating ways to optimize its project portfolio and still meet necessary deadlines for clients. Declining prices are the main factor slowing down expansion development while awaiting a rebound in lithium prices in the battery and electric vehicle markets.
In line with this, the CEO of the firm resulting from the merger between Allkem and Livent, Paul Graves, stated: "It is clear that very few lithium expansion projects make economic sense at current market prices, and the longer prices remain near these levels, the greater the impact on future lithium supply shortages. As we saw in 2022, this will increase the likelihood of a rapid increase in future lithium prices, although the complexity of the global battery supply chain makes both the timing and magnitude of such an increase difficult to predict."
"One of the many benefits of the merger is the opportunity to optimize and reduce the risk of our growth projects that have natural overlaps. By slowing down capital spending in 2024, we can accelerate the work needed to drive capital efficiencies both in Argentina and Quebec. We expect this to help us achieve an overall lower capital expenditure on projects such as Fénix and Sal de Vida, as well as between the James Bay and Nemaska Lithium projects. We also expect to improve the operational flexibility of these nearby assets as a result of the revised plans."
Arcadium Lithium expects growth capital expenditure between US$550 and US$625 million in 2024, with additional maintenance spending between US$100 and US$125 million. In line with this, as of December 31, 2023, Arcadium Lithium had a combined consolidated cash balance of US$892 million and a cash balance, net of debt, of US$297 million.
Scenarios and outlook for 2024
Higher total volumes are expected for the entire year 2024, with a 40% increase in combined sales of lithium hydroxide and lithium carbonate, partially offset by lower spodumene concentrate sales.
It is worth noting that most of Arcadium Lithium's hydroxide volumes are currently sold under multi-year agreements with established price terms (pre-agreed price or subject to floors and ceilings). Other lithium products of the company (such as butyllithium, high purity lithium metal, for example) are typically sold on a customer basis, with negotiated prices and monthly or quarterly price adjustments. Lithium carbonate and spodumene concentrate volumes are currently sold largely at prevailing market prices, set monthly.
