Livent to grow lithium business, secure status as battery makers’ main partner

By Martim Facada
Published: Tuesday, 20 November 2018

Company growth, production expansion and the ability to attract more investment were the main reasons behind FMC’s initial public offering of shares in Livent Lithium, according to chief executive officer Paul Graves.

The initial public offering (IPO) of shares in the newly created Livent Lithium will help the fledgling company to face the challenges of meeting global demand for lithium and to solidify its position as a major supplier to the fast-growing battery industry, according to chief executive officer Paul Graves.

The acquisition by Livent’s parent company, FMC, of chemicals giant DuPont set the course for FMC to become one of the largest agricultural solutions companies in the world, and thus also paved the way for the company’s lithium division to grow as an independent company, Graves has told Fastmarkets.

"We have been supplying lithium hydroxide to the battery industry for more than 30 years and have done so with stable supplies of high-quality material, which means that our customers can rely on us," he said.

"The IPO will allow us to work as an independent company, facilitating investments, and to make decisions independently, without the tensions that [can develop between] different segments of a company that is focused on diverse businesses," he added.

Livent has a history as a supplier of lithium hydroxide to the battery industry since 1986, from operations in the US state of North Carolina as part of FMC. Now it has a clear target to remain the chosen partner of the battery industry as a supplier of lithium chemicals.

FMC started the IPO process on October 11, 2018, and will end it on March 1, 2019, when FMC plans to sell to its shareholders the remaining 86% stake that it holds in Livent. Trading in the company’s shares opened on the New York Stock Exchange on Monday November 19 at $18.45 per share, within the expected price range of $18-20 per share.

Livent, Salar 
Source Livent Lithium: Livent's Fenix Salar in Argentina

Production expansions plans have driven the need for Livent to raise more capital and to become an independent company, but it expects to ramp up production only according to customers’ needs, amid the current growing demand for lithium compounds.

"We have plans to expand our lithium carbonate output from 20,000 tonnes in 2018 to 60,000 tonnes of lithium carbonate by 2025," Graves told Fastmarkets. "However, we will be using most of this lithium carbonate to produce lithium hydroxide."

To cater for the growing demand for lithium battery chemicals, Livent expects to produce 16,000 tonnes of lithium hydroxide in 2018, expanding this to 20,000-22,000 tonnes in 2019.

The company’s lithium carbonate production in 2018 is expected to be 18,000 tonnes, but it intends to increase this in 2019 to 18,500-19,000 tonnes.

Fastmarkets’ head of research for battery raw materials, William Adams, expects to see demand for lithium carbonate equivalent (LCE) growing year-on-year from 265,000 tonnes per year in 2018 to 345,000 tpy in 2020 and 1,000,000 tpy by 2025.

Fastmarkets Research expects a "low-case scenario" in 2018 of total global production of 272,100 tonnes of LCE.

Price volatility in lithium resulting from price swings in China has been one of the principal factors affecting contract price negotiations in recent years.

Over the course of the past 12 months, the price of battery-grade lithium carbonate, min 99.5% Li2CO3, ex-works China, has fallen by 55.14% to 74,000-83,000 yuan ($10,689-11,989) per tonne on November 15 this year from 170,000-180,000 yuan per tonne on November 2, 2017, according to Fastmarkets’ assessments.

This came after a sharp price increase in 2016, when battery-grade lithium carbonate spot prices in China rose by 198.87% to $26.60 per kg in March of that year from $8.90 per kg in October 2015.

But Livent intends to create a win-win situation on price for its customers on a stable, long-term basis.

"Livent looks to partner with our customers with the aim of providing prices that reflect broad market conditions, while also protecting both Livent and our customers from short-term price swings," Graves told Fastmarkets.

"It is not clear where the market will be [in terms of pricing] in the years to come," he added, "but our observations tell us that China is developing as a different market. We would not be surprised to see larger price volatility in China while, in the rest of the world, prices remained more stable."

The spot price of battery-grade lithium hydroxide monohydrate (min 56.5% LiOH.H2O) in China fell by 23.58% to 110,000-120,000 yuan per tonne on November 15 from 148,000-153,000 yuan per tonne on January 11 this year, according to Fastmarkets’ price records.

Meanwhile, the more stable contract prices for battery grade lithium hydroxide (min 56.5% LiOH.H2O), updated monthly, cif China, Japan and South Korea, were more resilient, falling by just 5.26% to $17-19 per kg in October 2018 from $17-21 per kg in January.

Looking toward growing Livent’s business at a steady pace, Graves told Fastmarkets that the company does not intend to grow for the sake of becoming big.

"We don’t aim to become the biggest lithium producer in the industry, we aim to be the most important partner in supplying lithium to the battery industry," he said.

Livent has a global footprint that spans across the Americas, Europe and Asia. It produces lithium carbonate and chloride in Argentina, lithium hydroxide in the US and China, and butylithium in all three regions.

At the moment, Livent is also the only western producer of high purity lithium metal.

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