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Albemarle Gets Nod for Increase in Lithium Quota in Chile

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Albemarle Corporation (ALB - Free Report) received approval from Chile's Economic Development Agency for an increase in its lithium quota, enabling the company to sustainably expand its lithium production in Chile to roughly 145,000 metric tons of lithium carbonate equivalent per annum through 2043.

Per the company, this increase in quota will be enabled by deploying innovative technology for extracting more lithium without requiring additional brine pumping at the Salar de Atacama, giving it the opportunity to boost capacity in a highly sustainable and efficient manner.

Notably, the company’s new brine yield technology is part of its Wave 2 capacity expansion, which is expected to start commissioning after 2021. The quota increase along with new innovative technology will result in a cost and margin structure similar to Albemarle’s current production processes. Albemarle will continue to actively monitor the market and add capacity, per requirement, to address the needs of its contracted customers.

Shares of Albemarle have declined 21.8% in the past three months, underperforming the industry’s 2.4% gain.

Albemarle incurred a net loss of $218.4 million or $1.95 per share in the fourth quarter of 2017 against a profit of $602.1 million or $5.30 per a year ago. The bottom line in the reported quarter was hurt by a $366.9 million of income tax expense associated with the new U.S. tax reform laws. However, adjusted earnings of $1.34 per share topped the Zacks Consensus Estimate of $1.21.

The company expects adjusted earnings per share for 2018 in the band of $5 to $5.40, a year-over-year increase of 9-18%. It also envisions net sales for 2018 to be between $3.2 billion and $3.4 billion. Adjusted EBITDA has been forecast in the range of $955 million to $1,005 million.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the basic materials space are Steel Dynamics, Inc. (STLD - Free Report) , Westlake Chemical Corporation (WLK - Free Report) and United States Steel Corporation (X - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Steel Dynamics has an expected long-term earnings growth rate of 12%. Its shares have soared 36.9% over the last six months.

Westlake Chemical has an expected long-term earnings growth rate of 12.2%. Its shares have moved up 51.3% over the past six months.

U.S. Steel has an expected long-term earnings growth rate of 8%. Its shares have rallied 63.9% over the last six months.

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