8. Arcadium Lithium plc (NYSE:ALTM)
Number of Hedge Fund Holders: 19
Arcadium Lithium plc (NYSE:ALTM) is focused on the production of lithium chemicals products in the Asia Pacific, North America, Europe, the Middle East, Africa, and Latin America. Lithium is a critical component of EV batteries. The company is one of the best EV stocks to invest in.
The company excels in a variety of lithium extraction methods, including hard-rock mining and direct lithium extraction (DLE), which enables the creation of high-purity lithium products such as lithium hydroxide and lithium carbonate.
During the inaugural Investor Day on September 19, management shared ambitious plans for the future. They expect a 25% increase in combined lithium carbonate and lithium hydroxide volumes for 2024 and 2025.
The growth stems from completed expansion projects at the Fénix and Olaroz sites, which are currently operational and do not require additional capital investment. Beyond these immediate advancements, the company is focused on expanding its extensive portfolio of resources in a manner that aligns with market demands and customer needs.
Arcadium Lithium (NYSE:ALTM) outlined a two-wave expansion plan across its high-quality and cost-effective assets located in Argentina and Canada. The first wave, containing four existing projects at various stages of development, is set to be completed by 2028, with projections indicating a doubling of current sales volumes.
Following this, the second wave of initiatives, still in the development and planning phases, presents the opportunity to ramp up production capacity significantly, targeting an increase of between 125,000 and 295,000 metric tons of lithium carbonate equivalent (LCE) beyond 2028.
The company has a clear path toward achieving an anticipated $1.3 billion in Adjusted EBITDA by 2028, dependent on certain market conditions.
The forecast is supported by low-cost operations and multi-year customer agreements, which help maintain healthy profit margins. Furthermore, anticipated price increases in the lithium market could improve revenue and incentivize supply growth across the industry.
Since the merger of Allkem and Livent in January 2024, which formed Arcadium Lithium (NYSE:ALTM), the company has been proactive in implementing cost-reduction measures. With expected savings of up to $80 million in 2024, the company now expects nearing its initial target of $125 million in savings by the end of 2025, approximately two years ahead of schedule.
The efficiencies result from organizational restructuring, operational synergies, and a streamlined supply chain, which indicates the potential for even greater savings in the long term.
First Pacific Advisors stated the following regarding Arcadium Lithium plc (NYSE:ALTM) in its Q2 2024 investor letter:
“Arcadium Lithium plc (NYSE:ALTM) is an integrated, low-cost, well-managed lithium producer formed by the merger of Livent, which the Fund owned, and Allkem in Australia. The merger was completed at the beginning of the year and we received, and decided to hold, shares of Arcadium. The share price has declined because of volatile lithium prices that collapsed from bubbly levels at the beginning of 2023.27 Estimates for electric vehicle production are slowing and capacity got ahead of demand; the industry is now waiting for a supply response.
Arcadium is an unusual investment for us. We normally avoid the commodity and materials sectors, and have kept our position in Arcadium small. But we believe Arcadium has a unique position in an industry with a strong long-term outlook. The company has low-cost production assets, is virtually debt-free, and has considerable capacity additions planned near-term.”
