CapEx Plans Amid Low Prices
Q: If prices stay low, will CapEx be sustained in 2025?
A: If prices remain at current levels, Albemarle would ramp down CapEx towards a minimum maintenance level of about $1 billion per year by the end of 2025, which could impact long-term growth.

Impact on Long-term Growth
Q: How would reduced CapEx affect capacity growth?
A: Reducing CapEx to maintenance levels by 2025 would materially impact Albemarle's long-term growth beyond 2027, limiting the ability to expand capacity and achieve the projected 20% growth rate through 2027.

Need for Higher Lithium Prices
Q: What price does lithium need to support industry growth?
A: Prices need to increase to develop new projects crucial for supporting the EV transition; while Albemarle can operate at around 30% margin at current prices, higher prices are necessary for acceptable returns on new investments.

Energy Storage Margin Outlook
Q: How will new facilities affect EBITDA margins?
A: The ramp-up of new plants is causing about a 500 basis point drag on margins this year; as facilities reach full rates over the next couple of years, margins should expand.

Cash Flow Conversion Improvement
Q: Will operating cash conversion improve going forward?
A: Albemarle expects cash conversion to improve in 2025 due to lower cash taxes and contributions from ramping facilities; current high cash taxes are based on prior-year income.

Lithium Market Fundamentals
Q: What are your thoughts on lithium market fundamentals?
A: Production cuts in China and elsewhere have marginally reduced supply, causing about a 15% price increase; strong demand growth in China and low inventory levels indicate positive signals for prices.

China Restocking and Demand
Q: Are you seeing restocking in China ahead of peak season?
A: Yes, inventories are at low levels, and part of current demand is to restock in anticipation of higher EV sales during the peak season.

Spodumene Auctions and Transparency
Q: Why is Albemarle running spodumene auctions now?
A: To increase market transparency and price discovery; it's not a change in strategy, and most products are still sold through long-term agreements.

Tolling Volume Outlook
Q: Will tolling volumes decrease over time?
A: Yes, as company-owned plants ramp up, tolling volumes will decrease; the intention is to be fully integrated and convert all resources with company-built assets.

Productivity Savings Progress
Q: Is faster progress on productivity savings apparent in results?
A: Albemarle is slightly ahead of schedule on the $280 million productivity benefits goal for 2024, with some savings reflected in reduced SG&A costs.

Ketjen Divestment Plans
Q: Have your thoughts on divesting Ketjen changed?
A: No, Albemarle still views Ketjen as a non-core business and anticipates a transaction when the timing and value are right.

Inventory Cost of Spodumene
Q: What's the cost of spodumene inventory vs. market index?
A: Higher-priced spodumene from prior periods is still being worked off; costs should align with market prices by mid-year.

Second Quarter Margin Expectations
Q: How will factors affect Q2 Energy Storage margins?
A: Expect about a 10 percentage point increase in Energy Storage EBITDA margin in Q2 due to increased partner offtake and additional volumes; margins will normalize in subsequent quarters but remain healthy.

Importance of North American Refining
Q: How important is refining capacity in North America?
A: Given geopolitical factors, Albemarle aims to have larger-scale conversion in North America but has paused some investments to assess market conditions and strategy.

Evolution of Cathode Chemistries
Q: How are you adjusting to evolving cathode chemistries?
A: Balancing production of hydroxide and carbonate to meet changing demand, with an eye on long-term shifts towards solid-state batteries and lithium metal.

Marginal Cost of Lithium Production
Q: Do you still see marginal cost around $20/kg?
A: Yes, while it changes over time, Albemarle believes the marginal cost is approximately $20/kg, with new projects expected to push this up.

Price Floors Impact
Q: Did price floors impact pricing during low price periods?
A: Yes, some price floors were tested and have held, coming into play for some of Albemarle's business at current prices.

Greenbushes Resource Growth
Q: Where will Greenbushes' next phase of growth come from?
A: Despite technical adjustments in reported grades, Greenbushes remains a world-class resource; expansion plans like CGP3 are underway, with potential for further expansion.

Effect of New Plants on Cash Conversion
Q: Will ongoing project ramps affect cash conversion?
A: While project ramps currently impact cash conversion, as they become a smaller part of the portfolio, this effect will diminish, improving cash conversion over time.

Customer Response to Auctions
Q: How has customer participation in auctions been?
A: Participation has been strong, with good interest and bids; auctions provide better market intelligence and have been well received.

Spodumene Inventory Costs
Q: Did Q1 spodumene costs align with projections?
A: Adjustments made in Q4 reduced cost discrepancies; while some higher-cost inventory remained, costs are aligning with market prices as the year progresses.

Operating Spodumene Facilities
Q: Will you make further adjustments to JV spodumene facilities?
A: No further significant adjustments are anticipated; Albemarle's resources are world-class and low-cost, and they're committed to exploiting them long-term.