Arcadium Lithium reports Q1 2024 results, touching on future expansion, sales, and Mt Cattlin

Arcadium Lithium announced its first-quarter results for 2024. The company recorded an average realised pricing of US$20,500 per metric tonne for lithium hydroxide and carbonate combined, driving adjusted EBITDA to reach US$108.8 million and a margin of 41.7%.

The earnings call presentation and questions raised afterward mainly focus on the company's production targets and expansion plans for different projects on the lithium supply chain, as well as the corresponding pricing mechanism and sales strategy in the next 2-3 years.

Future production targets and expansion plans

Arcadium Lithium is expanding its capacity, aiming to reach 170,000 metric tons of Lithium Carbonate Equivalent (LCE) by 2026 with “a very high confidence”, according to Paul Graves the CEO. This will be achieved through planned expansions through spodumene, lithium carbonate, and hydroxide projects in Canada and Argentina.

Funding is expected through a combination of free cash flows, prepayments, government loans, grants, and other financing options. The executive especially emphasises on the strategic investments in IRA-qualified projects from downstream partners.

Pricing and sales mechanics change

Arcadium currently has approximately two-thirds of lithium hydroxide volumes under contract and protected with price floors, with “much less exposure to that market price in Q1”; while in the future, as production picking up, the products are expected to have “more exposure” to the market prices, according to the CEO. In response, the company will look at supplying lithium carbonate and hydroxide with potential “paired contracts”, which provides optionality and flexibility for customers with various demands.

Mt Cattlin's fate in 2026?

The executive further confirmed that Mt Cattlin's future is contingent on an improvement in lithium market prices to justify the necessary capital for further mining phases. Otherwise, it could conclude operation in early 2026.

Mt Cattlin has witnessed a decline in production due to scaled-back mining activities, resulting in reduced sales volumes totaling 30,000 dry metric tons (dmt) this quarter, approximately half of the sales recorded in Q4 2023.

The average realised price in this quarter was US$920 per dry metric tonne (SC6 equivalent). The cash operating cost of production at Mt Cattlin was under US$700 per tonne.

Author: Hongqiu Su | Battery Metals Analyst Associate | London Office, Shanghai Metals Market
Email: lilysu@smm.cn