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Arcadium Lithium, the foremost lithium carbonate producer in Argentina, is expanding its Catamarca projects, even as a sharp drop in the global lithium price is causing headwinds for the industry. With lithium prices dipping below US$ 15,000 per metric tonne, down steeply from over US$ 60,000 just three years ago, the company’s move might appear to run counter to market sentiment, however, in view of global demand for lithium showing no signs of slowing, Arcadium’s move makes sense. Furthermore, the company will offset the costs of ongoing investment in Catamarca by adjusting or pausing investment plans elsewhere such as Canada.
Arcadium Lithium, formed from the merger between Allkem and Livent last year, is proving itself a force to reckon with in the lithium industry. Demonstrating great agility in the face of challenging market conditions, Arcadium’s response sees it switching the Fenix and Sal de Vida projects from a simultaneous development to sequential development that will allow it to spread the costs of investment over a longer period of time and so easing financial constraints resulting from the lower lithium price. Both projects are crucial to Arcadium’s future plans for expanding its lithium production capacity, with the Fenix project alone promising an additional 25,000 ton capacity.
Arcadium’s optimism is not without merit with its projections for 2024 including a 25% increase in combined lithium hydroxide and lithium carbonate production following increased production at Fenix and accelerated expansion at Olaroz. With Fenix reaching a full production capacity of 40,000 metric tons and Olaroz with 30,000 metric tons, Arcadium anticipates increased sales for the second half of this year with additional sales growth for 2025.
Although Arcadium responded decisively to the market downturn, it comes at the cost of a pause for its Galaxy project, formerly known as James Bay, in Canada. With a projected 40,000 metric ton production capacity, Arcadium is, understandably, reluctant to abandon the project entirely. As part of its efforts to continue development, the company is considering raising capital for the project through partnerships based on long-term investment.
Arcadium is looking to reduce capital expenditure by around US$ 500 million over the next 24 months, but this will not affect its commitments to developing another Canadian project, Nemaska Lithium. With a 32,000 metric ton capacity for production of integrated spodumene and lithium hydroxide, development of Nemaska Lithium remains an attractive investment for Arcadium.
In its second-quarter results, Arcadium reported an average price of US$ 17,200 per metric tonne for its lithium hydroxide and carbonate products, with an adjusted EBITDA of US$ 99.1 million. The company continues to focus on leveraging its low-cost, high-quality operations and securing long-term contracts with key customers to navigate the current market conditions. Arcadium also outlined plans to achieve cost reductions in the range of US$ 60 to 80 million in 2024, allowing it to maintain a competitive edge in the global lithium market.
Arcadium Lithium's decision to press ahead with its expansion in Catamarca, despite global market challenges, underscores the company's strategic commitment to Argentina and its belief in the long-term potential of the lithium market. By focusing on its core strengths and making targeted investments, Arcadium is smartly growing its leadership in the global lithium industry.
