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Albemarle Closes Buyout of Lithium Assets in Asia for $145M

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Specialty chemicals maker Albemarle (ALB - Free Report) has wrapped up the acquisition of the lithium assets of Jiangxi Jiangli New Materials Science and Technology Co. Ltd. for roughly $145 million. The deal includes manufacturing assets and supporting business functions located in Jiangxi and Sichuan, China focused on making battery-grade lithium hydroxide and lithium carbonate.

These facilities are strategically located in high growth regions and will allow Albemarle to strengthen customer service as well as deliver exceptional product diversity across end-use markets, geographies and technologies, especially in Asia Pacific.

The acquisition will allow Albemarle to supply premium lithium salts to an expanded global customer base and accelerate the company’s ability to meet its goal of capturing 50% of the growth in the lithium industry.

The Jiangli New Materials assets have a total lithium salts capacity of 15,000 metric tons per year. Albemarle is currently in the construction phase of an expansion project at Jiangxi to create an additional 20,000-25,000 metric tons per year of lithium hydroxide capacity. The expansion, which is slated to come on stream in 2018, will be utilized to satisfy long-term customer supply agreements.

Albemarle’s shares have gained 65.8% over a year, outperforming the Zacks categorized Chemicals-Diversified industry’s gain of 16.4% over the same period, partly reflecting its forecast-topping earnings performance over the trailing four quarters.


Albemarle's adjusted earnings for third-quarter 2016 topped the Zacks Consensus Estimate. The company raised its earnings outlook for 2016 factoring in favorable performance across its Lithium and Refining Solutions segments.

Albemarle is taking steps to strengthen its lithium business. The company, in Sep 2016, also entered into a deal with Bolland Minera S.A. that provided the former exclusive exploration and acquisition rights to a lithium resource in Antofalla (within the Catamarca Province of Argentina), which could prove to be the biggest lithium resource in Argentina.

Albemarle is also selling non-core businesses and assets to boost growth opportunities and focus on its key businesses. As part of this move, the company recently completed the sale of its Chemetall Surface Treatment unit to German chemical giant BASF for around $3.2 billion.

Albemarle currently carries a Zacks Rank #3 (Hold).

Other Stocks to Consider

Better-ranked companies in the chemical space include The Chemours Company (CC - Free Report) , Kronos Worldwide, Inc. (KRO - Free Report) and Methanex Corporation (MEOH - Free Report) all holding a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chemours has an expected earnings growth of around 60.1% for the current year.

Kronos has an expected earnings growth of around 261.5% for the current year.

Methanex has an expected long-term growth of around 15%.

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