Quarter 1
Q4 2025 Earnings Call — February 12, 2026
Analyst Name (Firm): David Begleiter (Deutsche Bank) Executive Name (Title): Kent
Thank you. Good morning. And first, thank you for the additional disclosures. Very helpful. Kent, on your lithium volumes, they'll be flat this year in 26. How should we think about volume growth beyond 27, in the 27, 28, 29 timeframe? Thank you.
Yeah, thanks. So I would say that we probably grew a little faster than we anticipated. It's kind of why we're running into a flat spot this year. And I think the headwinds from pulling inventories down so we were able to sell those last year and not this year. We still have growth opportunities at Greenbushes, at Wajana, and then we have longer-term growth from – Kings Mountain, and then the Florida Atacama. So I think we'll continue on a growth profile. We pulled back on our capital spending, so it's not as prolific as it once was. But I think we still continue that growth profile after 27, and we'll have to start investing once we see how the market looks for that. But we have opportunities. We have the fundamentals for it, the resources that we have, and the technology basis we have for that. It's just a matter of executing against that.
Understood. And just on Kemerton, Kent, how much higher cost is that asset than your Chinese conversion assets? And what lithium price would you need to see to restart Kemerton? Thank you.
Yeah, so in the Kimerton, I think, and then your point, I think you made it. We've idled the asset. It's not a shutdown. It's idle. So we keep it in a position where we can restart it if we get into those conditions. But the cost structure between China and, say, Western supply, but particularly Western Australia, I mean, it's across the industry. It's across areas like China. Reactants tailings disposal is a big difference; there's a big industry in China that kind of works through tailings and we don't have that in the west. We've made progress in Australia with government support around taking those costs down, but it's still significantly different. Labor's higher power, so there's a gap there between China and the west and Australia. It's probably four or five dollars something like that, and that's going to have to be addressed if you're going to build out a Western supply chain. We either need differentiated prices to cover those costs from the West, and we've not been able to get that support so far.
Analyst Name (Firm): Jeffrey Zakowskis (JPMorgan) Executive Name (Title): Eric
Thanks very much. Can you comment on how much Chinese lithium capacity you think was closed down from about the middle of 2025 today because of various actions? And do you think that the Chinese government or steps that the Chinese government took were key to that capacity coming offline?
So I'm going to let Eric get into some of the specifics around maybe the mines or the capacity that comes around it. But I think there is – I mean, the Chinese government has been paying attention to this. I think it has had something to do with that. It's not all driven there. So you've had some capacity come on. We've also been surprised to the upside on demand, particularly the fixed storage applications have been much stronger. So it's where – Demand didn't grow. I mean, supply did not grow as much as we had anticipated. It's still growing, but it's not as much as we've anticipated. And demand grew more than we thought. So that's where it's gotten. It's getting tighter. And I think the Chinese government looking at environmental regulations and some of the permitting, they're getting a little bit tighter on it. And it's had, I would say, some influence.
Executive Name (Title): Eric
Yeah, so Jeff, we would say that just a bit of an update. There are about seven petalite mines that continue to operate even while they await permits. So it's not that petalite capacity in China has completely disappeared. There's still a good amount that is online. The one large facility you may have heard about is owned and operated by CATL. That is still offline. In total, we think about 30,000 to 50,000 tons of capacity came off in 2025. We'd expect that that's possible to come back on at some point in the coming year. Effectively, we've modeled that. Now, your question about the regulatory environment, there is an increased oversight on waste tailings generation and general environmental operating conditions in China. It's probably too early to say how that will play out. Safe to say if implemented it would affect all operators and the cost division of all operators because it hits all elements of how to manage handle and dispose of mine tailings and environmental waste.
Great and thank you for that. And then I guess on slide 27 you have your forecast of specialties adjusted EBITDA for 2026 which you put in a range of 170 to 230 versus 276. What's behind that decrease?
So just to clarify, Jeff, this is Eric again.
Your question is what's behind the decrease in specialties year-on-year earnings?
Yes, for 2026.
Indeed. Okay. So a couple of things that are there. Well, number one, as Kent described in the call, we're not getting much of a lift from demand growth year on year. So that's not a helpful tailwind. Just to clarify that, the issues there are that in certain markets, such as process chemical industries, oil and gas, elastomers, that's a part of your coverage universe. You know that that's an industry that's not particularly healthy, and that's impacting our demand growth in those areas. There's some offsets, pharma, semiconductors. Those are performing well. I think the big driver is lithium prices, lithium specialties prices in particular. This is a business that does not contract or move like the energy storage. It's not very commoditized, especially, but it does echo the price curve of LCE over time. And we were successful in the past years of getting long-term contracts based upon very high LCE prices at that time, and those have now come off. And we saw a step down of that a little bit in the fourth quarter, and Neil mentioned that in his comments, and we're going to see more of that to come this year. Obviously, now that's turned, but it's too early for the turn in LCE prices to affect a subsequent series of contracts. We'll just have to wait and see.
Analyst Name (Firm): Josh Spector (UBS) Executive Name (Title): Management
Hi, good morning. I wanted to ask on just your approach on how you're thinking about investing in this cycle. You guys did a lot of work over the last couple of years to get free cash flow to where it was last year. So how long do prices need to stay at the 20 to the round plus level before you think about started spending? Or are you going to harvest cash for longer than what you might have in a prior cycle, just given what we've learned here?
Yeah, so we probably will be a bit more conservative than you've seen us be in the past around that. But we do have projects. I mean, we've been mindful as we've cut capital, taken out some of the big pieces. We've tried to get our sustaining capital in a place where we think we can – hold it, and we're investing in our assets, but not over-investing, but also looking for incremental projects, smaller capital, quick returns. You've heard us talk about that in the past and over the down cycle, particularly focused on that. And then the growth programs are more incremental, like we said before. You can see us ramping up CGP3 at Greenbushes, for example. At Wajana, we've got a third train there that when we get to Better Ore, we can operate that without significant capital. And then we can build Salar to Atacama. Salar Yield Project is still ramping, but it's going very well. It's generating good data. So we think that's going to really help our efficiencies and recoveries as we go forward. So we have... the opportunity to make smaller investments and still get some growth. The bigger ones are to come. Kings Mountain, some other projects, DLE, for example, in the Salar that would give us additional volumes are bigger investments. Those are not right in front of us, so we'll have the opportunity to see how the market responds before we make commitments on things like that.
Okay, thanks. Just quickly on Kemerton, you talked about the $100 million shutdown costs. Can you just go through other pieces? I guess how quickly is the payback on that cost? And then are there any ongoing basically costs to keep the capacity idle?
So there are ongoing costs to keep it in a ready state, so to speak, idled. And they're not dramatic, but they are significant costs. And it's something we can do for a period of time. We can't keep it here forever, but we can keep it here long enough to see if we can – bring it back, the market changes, and really the change we're looking for is probably a bifurcation where Western prices are different than prices in China. That's really what we're looking for and to see that that's sustainable over time to cover those costs. And the payback on that, I mean, I don't want to, I'm not going to say exactly what the savings is around that, but it's a reasonable payback.
Analyst Name (Firm): John Roberts (Mizuho) Executive Name (Title): Management
Thank you. Could you talk about the differences between China and ex-China lithium market pricing? I know you don't want to discuss your own contracts, but what's the market doing ex-China?
Well, I'll take, I'll make a broad comment. Eric, you can jump on that if you want, but I don't, there's not, I mean, there's not a big difference, right? For the most part, everyone wants the China price. There are some circumstances where you can get that a little bit of a differentiation. But for the most part, and the way it's been for the last several years, it's more or less the same price. There are some incentives in the U.S. where some of that will flow through to lithium prices from resources outside of China or material outside of China, but it's not, it doesn't characterize the whole market, I would say.
Executive Name (Title): Eric
Yeah, John, just adding. So structurally, you would know that in the past, when China has been a big producer of lithium, the general difference has been the 13% VAT. So prices have been about 13% higher outside versus in. That's just a structural difference. I think, though, however, what Ken's alluding to is important. The market is dynamic and it's changing. The growth and maturity of the GFX futures exchange is increasingly becoming the benchmark. There's, given that it's traded every day, there's great transparency to that number, or one can see it very clearly. And outside of China, people have tended, even our contracts, contract relationships have tended to rely on PRAs, Price Reporting Agencies. And with the dynamic change of what's going on with the GFX, the challenge is, are the PRAs keeping up with that rate of change?
And then I think you said you modeled CATL's capacity coming back this year. Could you share when you've modeled that back online?
I mean, I think we've probably, we've taken an assumption that the metered in slowly. Again, John, we're talking about 30 to 50,000 tons. You look at the scheme of what's the demand growth, the supply-demand balance, and where inventory levels are. I don't think it's going to make that much of a difference.
Analyst Name (Firm): Lawrence Alexander (Jefferies) Executive Name (Title): Management
Good morning. First of all, can you discuss whether there's any material difference in contract structures developing between stationary storage and automotive in terms of their degree of emphasis on reliability of supply or consistency of quality control or product formulation?
Yes, so for us the material goes through the same supply chain right so we're selling it into the same supply chain that we do for automotive and we do for fixed storage. Probably the biggest difference is by definition all the fixed storage is carbonate and that we tend hydroxide tends to be go to the West. So those tend to be where our long term contracts are. Carbonate tends to be more on the spot market and the China price. So that's the biggest difference. But it's really driven by the product mix that goes into fixed storage versus there's a combination for carbonate. The EV market, and it's pretty much all carbonate and LFP for fixed storage.
And just a couple of characteristics to add to that that make it important maybe to get at the root of your question, Lawrence. For one, fixed storage is largely carbonate, that's largely LFP, and that's almost entirely China. And carbonate has a pretty harmonized spec. It's closer to being like a classic commodity than hydroxide. Hydroxide has a lot more requirements that the automotive producers put on it for the life of battery and the safety they're looking to get. And there's, as a result, given the challenges of making consistent grade hydroxide, there's a much more of a variation across producers. So it's a more detailed qualification process. Some of it is the user, some of it is the chemistry, I guess is the point.
And then just in terms of how you think about the lessons learned about balance sheet management against strategic comparatives or longer term, how are you thinking about the development of solid state as a solution in the battery market and the potential competitive threats from sodium ion batteries?
Yeah, so, okay, two ends of the spectrum there. So, look, on solid state, I mean, it's still, it's lithium, and we still, the driver will be EVs, so the lithium intensity for solid state goes up a little bit, so it gives us a kicker, but it's really driven by the EV penetration and that growth in that. So that seems... From our standpoint, it's a positive. It's going to grow that a little bit. But again, we've got time because we don't see it becoming mass market immediately. So we have time to understand, allow the market to mature. So we're early in the cycle, probably earlier than we anticipated from lithium. We think we've just been through the second cycle since the advent of EVs. So that's still immature from a commodity cycle perspective. So we're still watching that and learning and making sure we understand that.
On fixed storage and sodium ion, we think it's going to be relevant. It'll be a technical player in the market, but it still has to develop technically and it has to scale. So it's not impacting us, we don't think, much this year. In our forecast, as we kind of build out the forecast, I think we built early on 10% sodium ion as fixed storage and that growing to 15%, maybe toward the end of the decade. Just, again, to add some context, I think it's important. One, as Ken said, solid-state, a good news story. A solid-state battery has 2x the amount of lithium in it that a cell would for a lithium-ion battery. There's some different tech involved. There's a different supply chain involved. So it's going to take a while. Similarly, sodium is going to take a while as well. And that's obviously a drawback. And it's part of the reason we have such a variation in our ESS forecast in the deck that we presented is because there are some things that have to happen. Sodium energy has to get more energy dense to be cost competitive with LFP. At the range of prices we shared in these scenarios, LFP is always more cost competitive today than is sodium ion battery.
So there has to be innovation. We expect innovation to happen. The second is scale that Ken said. And then the third is it will be limited because in the end, it will never have the volumetric energy density that lithium would, whether that's lithium iron phosphate or lithium metal. So it's limited in storage spaces to where space is not an issue. So think a cornfield versus New York City. New York City isn't going to work so well. Cornfield will work out in Iowa. And then obviously EVs has the same limitation. Volumetric energy density is critical for EVs. So we see very limited penetration there. So it's two different ends of the spectrum, as Ken said. Those are all the drivers.
Analyst Name (Firm): Vincent Andrews (Morgan Stanley) Executive Name (Title): Management
Thank you, and good morning, everyone. Just thinking through, you know, sort of shipments versus consumption, you know, early in the cycle, there tends to be, you know, sort of a reload that helps prices, you know, move higher. And, you know, ESS obviously is a big driver, and some of the data would show that ESS shipments are moving, you know, kind of a 2x the level of ESS installations, which, you know, to a certain extent makes sense, right? It's a very growing part of the market. So as it grows, inventory needs to grow in between, but how do you assess sort of where customer inventory levels are and where customer behavior is sort of as prices have gone up and then maybe come off the bottom as you think about what actual demand or consumption is going to be in 2020 segments?
So, look, there's a couple different supply chains you have to think through. But, I mean, kind of across the board, we think inventories are at a pretty low level, particularly from a lithium side. But sitting in batteries everywhere, the inventory levels are pretty low. Now, we're in the Lunar New Year period. And as we come out of that, that's where we'll get information to see exactly what demand is going to look like this year. But everything seems to be pointing in the right direction. And we see installations on fixed storage kind of continuing the trend and keeping up. We follow that versus what goes in. So the batteries are probably where we ship is probably six months ahead of where it gets shipped to an installation, six months to a year before an installation happens. And we see that reasonably balanced. So it looks pretty real from our standpoint.
Analyst Name (Firm): Neil Executive Name (Title): Management
That's very helpful. Neil, could I ask you to fill us in on some of the other cash flow statement items on working capital? Just thinking through, you've got higher prices, your inventory is at low levels, but what should the makings of AP, AR inventories look like in 2026, just given what's happening from a price perspective, both for your revenue and your sparring costs?
Yeah, hi there, Vincent. Thanks for that question. So maybe I won't go through every line of working capital, but I will say, first of all, on inventory, obviously we saw very strong demand at the end of the year, of last year, and we capitalized on that, and we're able to bring down our inventories a little bit. As you can expect, in 2026, our production levels are up. Some of that will go towards restocking our inventories and making sure that we have the right amount of inventory to supply the demand. But in a rising price environment, you do bring up a good point that in a rising price environment, working capital could be a short-term cash flow headwind. The way we think about it is generally speaking for the company, our working capital balance sits at about 25% of sales. That's usually a pretty good rule of thumb. So maybe that is helpful as you think about in a rising price environment, how to model the working capital piece.
Analyst Name (Firm): Joel Jackson (BMO Capital Markets) Executive Name (Title): Management
Hi. I just want to follow up on slide eight. So, you know, you talk about your sensitivities and your margins. And if you look at Q1, you know, you're talking $20,000 a ton is about the spot price. You said for the January prices. So should you be delivering mid 50s EBITDA margin in energy storage in Q1?
So, well, you have to consider the lag on the way our contracts work. So we'll get the benefit of the current market price on the spot business we do, but our contract volumes all kind of have about somewhere a couple of months lag, usually three months lag that works through that. So we have to have the opportunity for that to work through our P&L. Otherwise, once we get that, that should be the case.
Okay, so just following up on that then, so you should have been, if spot price is exactly where it is, you should be achieving mid-50s EBITDA margins in energy storage in Q2.
It's just a bad question. And also, just clarifying, Kent, you talk about $4 to $5 a kilo of conversion costs now in Kemerton. Were you talking about that's your absolute cost? You see that conversion costs were in Kemerton or Western Australia? Or were you saying that $4 to $5 a kilo was how much higher the costs are in Kemerton versus China? It's just a two-part second question, I think, Hugh.
Yeah, so it wasn't a Kemerton answer. It was a general, broader answer, and it was like a $4 to $5 difference between China and her, I would say, to be clear.
Analyst Name (Firm): Kevin McCarthy (Vertical Research Partners) Executive Name (Title): Management
Yes, thank you, and good morning. Ken, I'd welcome your latest thoughts on potential to acquire lithium capacity versus build it. It seems to me you've delevered the balance sheet quite a bit. You've got more cash coming in from catching. We're talking about price recovery and positive revisions to ESS demands. So if we zoom out the lens and just think about where you are financially and where we are fundamentally in the cycle, might we see more inorganic growth from Albemarle in the years to come?
Yeah, so, I mean, we'd be talking down the road, if you're thinking from that perspective, because we still have, but one, we want to make sure we've got really good footing, understand where the market's going as we go forward, because price has moved up, and we just want to make sure that that consolidates, so to speak. And we also have pretty good opportunities within the portfolio for investors. I'd say it's incremental growth. It's lower capital than building greenfield facilities. And it's mostly around resources. And then it's incremental capacity at our conversion facilities, whether that's at Lenegra or in our conversion facilities in China. And then we also have tolling opportunities as well. So I think we've got good organic growth opportunities. We'll look at acquisitions as they come up, but that's not our focus. And we would have to see the right opportunities for that. The right fit at the right price, we would look at it. But that's not really our focus at this point in the cycle.
Analyst Name (Firm): Colin Rush (Oppenheimer) Executive Name (Title): Neil
Yeah, I wanted to just follow up on the cash question. You're really in a fundamentally different place from a balance sheet perspective. And I'm curious about, rather than acquiring new assets, looking at optimizing your cost of capital on the balance sheet and some of the instruments that you have, if there's real opportunities to streamline things.
Yeah, hi there, Colin. Thanks for that question. This is Neil. So, yeah, I think one of the key things that we're focused on is making sure that we have the right kind of headroom to navigate through the cycle. And you saw in our capital allocation slide today that in addition to, you know, making sure that we meet our dividends, we are also focused on ensuring that we have deleveraging opportunities. So we're going to continue to look at that. You know, if you're looking at other parts of the capital structure, look, the best thing I would say is we evaluate where is the best economic place for us to delever and strengthen our financial profile. And I think our comments today really highlight where we see the best opportunities. I really think the best opportunities are in the deleveraging space. But we do look at all of our options. And certainly with our cash position where it is today, that's kind of our first and foremost priority right now.
Analyst Name (Firm): Eric Executive Name (Title): Management
Okay. That's super helpful. And then, you know, for Eric, I'm really curious about customer behavior here, I mean, getting a deposit is a pretty big signal to the market about where folks see overall supply-demand balance on a multi-year basis. As you look at EV versus stationary storage and increasingly robotics and customers, can you talk a little bit about the different behavior and concerns around regional nuances, tariffs, and security of supply and supply chains between those three buckets of customers?
Sure, happy to call. And it is a very dynamic time, to be sure. And I think so much has happened so fast, it's going to be hard to draw hard conclusions right now at this moment. I would say that when it comes to the EV market, it depends on who you're talking to. If you have someone whose market is largely the United States, it's a very different picture than someone whose picture or view is Europe or China. When it comes to grid storage unanimously, that's an area of interest. Remember, though, that in some levels, it's the same customer for us, depending on where we're in the supply chain. Obviously, we do have some contracts with OEMs. The balance of our contracts with battery producers, we do a lot of spot business with cathode producers. So we see the whole supply chain through different eyes. The further up you go, the more bullish you get because they're less focused on any specific end market. We have seen a lot of customer dialogues come forward with the rise in prices, but it's way too early to say where that's going to go. I mean, at this point, again, depending on who you're talking to, they have a very different view of their needs. And so we're just going to have to see how that plays out over the long term in terms of our contracts. But right now, it's just too early to call.
Executive Name (Title): Management
Thank you. That's all the time we have for questions. I will now pass it back to Kent Masters for closing remarks.
Thank you, operator. In closing, I want to thank you all for your continued support and trust in Albemarle. Our strong results this quarter, improved outlook for 2026, and ongoing focus on operational excellence position us well for the future. With our world-class resources, strong track record of cost and productivity improvements, leading process chemistry, and commitment to customer success, we're confident in our ability to create lasting value for our shareholders and seize opportunities ahead. We appreciate your partnership and look forward to connecting at our upcoming events. Stay safe and take care. Thank you. This concludes today's conference call. Thank you for your participation. You may now disconnect.
Quarter 2
Q3 2025 Earnings Call — November 6, 2025
Analyst Aleski Yefermov (KeyBank): Thank you. Good morning. Strong results. I wanted to ask you about dynamics at Atlas. You mentioned you'll have better profitability because of higher spodumene prices. How do you think this would evolve in maybe first half of 26? Would you see higher spodumene costs? Would that be, again, offset by higher equity income or not? If you could walk us through that dynamic for your lithium margins.
Executive Neil (Title): So we won't predict the price. So for lithium, for salt or spodumene, but the market is tightening. It is tight. It has moved up a little bit, so we're optimistic about that, but we don't plan on that. And from a spodumene standpoint, it all depends whether prices move up. The margin will either stay with salt or it moves over to spodumene. And we're a bit indifferent because of the integrated network that we operate. So I don't know that there is a big difference between the two. Recently, in the recent past, when prices move, most of the margin moves to the resource, so spodumene. And then I think the other part is a little bit about the Taliesin and inventories and the way that that gets costed.
Executive Neil (Title): Yeah, Alexei, I think you're thinking about it right that in a rising spodumene price environment we get one immediate benefit which is obviously any sales or that Talison makes to our partner we get some of that benefit immediately through our equity earnings but then of course our portion of the profit does go into inventory and it comes out over time as we consume the spodumene. So you're right, there will be some lag. It's usually six to nine months that some of that comes through in our cost of sales. But whether it leads to margin compression or margin improvement really depends on what happens with salt prices, you know, six months from now. But I think you're thinking about it right. There is one component that we realize right away, and then there's another component that has to flow through our inventory.
Analyst Jeffrey Zakakis (JP Morgan): Thanks very much. You used the $9 price as a reference point. In China today, are we closer to $11, $10, or $11?
Executive Neil (Title): Nope. So, yeah, you're probably closer to 10 today. But as we look at it on a full year basis, it's kind of a 9, 950, something like that. Are you giving any consideration to starting up any of your plants where you've paused production or mothballed the plants?
Executive Neil (Title): No, I wouldn't say so. So we haven't brought that back. So we're just forecasting to the end of the year. So that's a couple of months. And it would take us longer to bring those back on. So they're not in that scenario. And it would depend on the market and how that works. But that's not really the plan as we think about it for next year either.
Analyst Colin Rush (Oppenheimer):
Analyst Vincent Andrews (Morgan Stanley): Thank you, everyone. Just a quick question. When you talk about the full year adjusted EBITDA margin potential of 30% or greater at $15 a kg, are you speaking of the energy storage segment or the company overall?
Executive Neil (Title): The overall company.
Analyst Vincent Andrews (Morgan Stanley): Okay. Thank you. And then if I could ask, in the capital allocation slide, you talk about, you know, with the billion four paying down or deleveraging, but then there's also another language about liability management opportunity. What does that refer to?
Executive Neil (Title): Yeah, Vincent, I can cover that. You know, I don't have specifics to share today, but we are obviously looking at a combination of things, not just gross delevering, but also anything else that we can do with our debt towers just across our entire debt stack. So that's what is meant by liability management. It might not always be gross debt deleveraging, but it might be actually just thinking about our debt towers and being responsible with that.
Analyst John Roberts (Mizuho): Thank you. Actually, this is for John. So when you look at EV demand, do you have a good sense of how much is energy storage versus EV, and how do you see those percentages moving over the medium term?
Executive Neil (Title): So, yep, we do. We have a pretty good view, and those are reported independently. And the numbers that we're showing are independent of those. So we think that there is some mix because it is kind of a base. It's the same base technology that goes into both. But we feel like we understand where it's going and what the markets are doing. So I think energy, the fixed storage is about a quarter of the market today. And it's growing at a couple times the rate, but we still see it probably being long term, the market is more EV oriented than fixed storage. But that's the dynamic. You just look at the math, right? If it's a quarter of the market, maybe it gets to half. I'm not sure. And over time, it will depend a little bit on substitute technologies. I think fixed storage is more exposed to substitutes than the EVs. So I think that has to play out over the next decade to see where that really ends up.
Analyst David Begletter (Deutsche Bank): Thank you. Good morning. Ken, for you and Eric, on Chinese lapidolite, how much supply do you think is being currently curtailed versus the high of lapidolite production? How much is production down today versus that high?
Executive Neil (Title): Eric can give us some details on it. Overall, it's not been a huge impact. There has been some impact. They've come out of the market and come back in. That's probably been the bigger piece. There are a number of plants that are looking for permits, but they are operating through that. That's our understanding of that. They need to get new permits. They've applied for those, and they're allowed to operate through that.
Executive Eric (Title): Yeah, I think since the middle of the year, David, about a third of the production was impacted through re-permitting exercise and or as to title for a period of time. Some of that is it we don't know all the cause for that. I mean, there's a lot of discussion about what's happening in China on policy. But nonetheless, that's what we've observed. That's about eight different lipetalite operations, including the largest, which is CATL. That's a reduction of about 30,000 tons annually. But I think
the question is how long they remain down as they go through permitting. In the scheme of the market, should they come back, you're only talking about a couple percent of supply over the course of a year. So it's a minor blip. And we'll continue to watch it carefully.
Analyst David Begletter (Deutsche Bank): Very good. And just on looking demand, you did not include your slide from the last time, looking demand forecast. So for 2030, has there been any change to your looking demand outlook? If it hasn't been, has the buys moved to the upper end of that range, i.e. 3 million tons or above, given what you've seen the last maybe six to nine months here? Thank you.
Executive Neil (Title): Yeah, so we didn't show that. I would say it hasn't really changed, but it has probably moved up a little bit within that range. If you recall, we had a pretty big range because of some of the uncertainties. And then I think on both the EV and on fixed storage, it's probably more demand. I think it is a demand story. And that's higher than we were thinking about at the beginning of the year. So it's been a positive surprise. The range stays the same. It's well within that range. But I would say it has moved up a little bit.
Analyst Chris Perella (UBS): Hi, good morning. It's Chris Perella on for Josh. As I think about the ramp of the extra training green bushes and your production in La Negra, how much could your resource production be up in 2026 with just the scheduling of those ramps? And then also, do you have a first right of refusal on Wajana? And are you guys discussing the future of that asset and the ownership with your partner down there?
Executive Neil (Title): Okay, so first off, I guess on the asset. So La Negra is pretty much ramped at capacity today. We have some marginal improvement. We can do that as a result of solar yield, and that worked its way through the process in the solar. So we'll see better feedstock at La Negra, and that'll give us a little more capacity, but it's incremental compared to the overall ramp that we've been through the last couple of years. And then... DGP-3 at Taliesin will start up at the end of this year, and then we've got a kind of plan to ramp through next year. So it's kind of a ramp through the year. It will depend on how well we execute on that and how fast it comes up, but we tend to straight line it through the year to kind of more or less full capacity by the end of the year, and then you can do the math to see what that gets you throughout the year.
Executive Neil (Title): And, oh yeah, Wajima. So you're asking about Wajima. I'm not going to comment on the process that's happening down there. You probably can read about it in the Australian press that's doing that or what's happening there. So we talk to our partner. We're aware of what they're doing. So we'll see. We'll let that play out. I think another feature to bear in mind as we look to next year, Chris, is that a good part of our growth this year, as referenced in the prepared remarks, has been that we've taken a lot of inventory out of our supply chain this year. And that would largely be spot inventory in the case of energy storage. That has fed growth that is one time in nature. And so we don't get the benefit of the inventory reduction next year. So the factors that have been described are going to help to offset that. It's important to keep in mind as you think about next year.
Analyst Christopher Parkinson (Wolf Research): Great. Thank you. This is Harris Fine. I'm for Chris. Just curious maybe if we could talk about the stronger volumes this quarter. How much of that was just you being opportunistic on spot sales because of price volatility? And I guess dovetailing off of the last question, how should we be thinking about the impact on volume growth next year versus the higher baseline? Thank you.
Executive Neil (Title): Yes. I mean, there is some us being opportunistic. Eric just described that inventory reduction. So that's part of our cash management initiatives we were doing to drive that. But it did give us a little extra growth this year. And we won't have that opportunity next year because we've driven inventories down. But the market has been the market strong. Right. But demand and pricing is a little stronger than it has been. So we're optimistic about that. We're not counting on it, but we're optimistic about that. And it's been a bit of a demand story, I think, over the last quarter or maybe even a little bit longer that it's stronger and both. And that's both positive. EVs as well as fixed storage fixed storage has been the big upside surprise this year and it's been very strong and we see that continuing.
Analyst Harris Fine (Wolf Research): And also just wanted to touch on, you know, there's been a lot of news flow about critical minerals support. We saw what happened with lithium americas. Just curious to hear what the latest you're hearing is and in the event we start to see maybe the government engage a little bit more concretely on the localized energy storage infrastructure. Maybe just some thoughts on the scenario planning you're doing in terms of how that might shift your strategy either way.
Executive Neil (Title): Right. So I would say we're very happy to see the government focused on critical minerals. The U.S. government, but other governments around the world, we think that's important. We've been saying that for years, that it's important to build out a globally diverse, competitive lithium supply chain. And to see governments focused on that is fantastic. I'm not going to speculate on what could happen with the governments. We're talking to governments all over the world, all the time, everywhere that we operate. But there won't be one solution. So it'll be a mix of things that'll help the market in the West get to reinvestment levels. So tax incentives, trade policy, direct investment maybe. And I think it will be a mix. And there'll have to be a combination of some public-private partnerships to drive this because it's a big problem. But we've been talking about it for a couple of years now. And we're happy to see governments focused on it.
Analyst Lawrence Alexander (Jefferies): So as you look at the way policy is shifting both in Latin America and in the U.S., what do you see as kind of the appropriate return hurdles for you to engage in new projects as opposed to just focus on your existing assets and or opening up Kings Mountain?
Executive Neil (Title): Yes, I don't think our return criteria has changed, right? We've been pretty consistent about that. The issue has been with the pricing that we see in the market, we can't get those returns, which is why you don't see us investing. And we've been focused on kind of balance sheet, cash, driving costs out of the business so we can compete at that lower level. And look, our view is, and we've said this, we don't... We're not able to predict the lithium price and we're not going to depend on that. So we have to be able to compete through the bottom of the cycle, which is why you've seen us so focused on cost and cash and getting our business in a position to do that. We're getting there. We still have room to go. And if the market, but our view is we plan for the bottom of the cycle, but stay agile so we can pivot when the market gives us that opportunity to invest. We still have good investment opportunities. You mentioned Kings Mountain. We have very good resources that we can still leverage as we go forward. And conversion is still a possibility, but the economics, they're still not there today for Western economics or conversion, Western conversion economics.
Analyst Lawrence Alexander (Jefferies): And is your cost structure at the point where if prices do not improve next year, your cash flow, your free cash flow positive?
Executive Neil (Title): So we're not forecasting next year yet. So we'll do that next quarter. But we've driven cost out. I feel pretty good that we built a cost out mentality around productivity, particularly in our operations. I think we can be better at it from an overhead and back office, but we're working on that. We've made good strides around that and we'll continue to drive that so we'll continue to drive cost and work on our cost position. It's still a new market and it's going to be volatile and dynamic and we have to be able to ride that on the capture the upside but work our way through the downside. So I don't want to forecast, we're not going to forecast next year, today, but we're continuing to stay focused on that cost out. And that will drive the result for next year and years going forward. But I think you should think of our business as that we make sure that we can ride through the down cycles and then take advantage of the up cycles.
Analyst Patrick Cunningham (Citi): Hi, good morning. Thanks for taking my questions. And just a couple, you know, related follow-ups to your last comments. I guess, you know, anything else you're looking at in terms of productivity savings program into next year and what would be the size and sort of the incremental carryover? I know you reached, you know, run rate sometime in the middle of the year.
Executive Neil (Title): Yeah, so Neil can talk about the run rate carryover, but we continue to have productivity programs, and they go across the breadth of our business. Our programs around operations are the most mature, and it's not surprising given our legacy as a specialty chemical company, but that's pretty mature, and we go down the range of our supply chain's a little less mature. Our back office is even less mature than that. But we're building the capability and leveraging off of the program we have in manufacturing. So you'll always see us have productivity programs and goals. Even if the market is hot and on fire, we're still going to be pushing to take cost and productivity out of the business. I think that's just going to be a feature of our business, and that should be a feature of a healthy business.
Executive Neil (Title): Yeah, and Patrick, maybe the other thing I can add is just to reiterate, so we see line of sight to a $450 million run rate in cost and productivity savings this year. So obviously, we'll have to see how we finish up the year in terms of the actual savings, but you're already seeing those savings come through in our S&A line and our R&D line and so on. But obviously, some of those will continue to roll into 2026, and we'll give you an update on that with the next quarter once we finish the year. But let me give you an example of what you can expect to hear as you get into 2026. Just a small example, though, is that we continue to ramp our facilities to full rates. That's a perfect example of the productivity measures that we're really working on. Kent kind of highlighted that in Chile, we're almost to the kind of top end of what we could do with La Negra. Our Meishan facility in China is, I think, about a year ahead of schedule in terms of its ramp, and it's getting almost up to full rates as well. So you can expect that kind of continuing to sweat the assets as a key theme in our productivity on top of any other additional cost actions that we can take as well.
Analyst Patrick Cunningham (Citi): Got it, that's helpful. And then maybe just a quick one on roaming. It seems like there's some strong demand there in areas like electronics but, you know, maybe some offsets that have pulled performance down and you know seen some normalization in prices. Now, how have sort of the growing supply and demand trended throughout the balance of the year, and what sort of outlook are you seeing for the fourth quarter?
Executive Eric (Title): Yep. So, this is Eric. First, on the demand side, you're right. It's still a mixed market, reflecting probably the many of the GDP-oriented markets, growth markets that we serve. So, for instance, you mentioned electronics, pharmaceutical. Those have been stronger markets. Weaker markets have been building construction and oil and gas of late, stronger earlier in the year, but with a drop in the price of oil a little weaker in the second half of the year. We saw, if you look at the supply side and the tightness or balance of supply and demand, middle of the year, we saw some tightness. You may have seen, if you follow elemental bromine prices, particularly out of China, there's an index you can follow. You've seen that price rise. It's now started to come down again as the market has become more balanced. On the one hand, on the other hand, we're headed in a time of year where seasonally production, some seasonal production in India and in China that comes offline due to the winter months. And as that happens, I don't think we're going to get to a tight situation, but we'll remain fairly balanced. So we're not looking at this as being supremely oversupplied or undersupplied, therefore dynamic from a price standpoint on elemental bromine at the moment, fairly balanced as we go into the end of the year.
Analyst Rock Hoffman (Bank of America Securities): Hi. Does the energy storage volume beat contain the pull forward? And just given the stronger near-term volume assumption, where would you expect the contract spot mix to shift in 4Q and thereafter?
Executive Neil (Title): Yeah, so pull forward, as you described, that's mostly inventory, right? So we had inventory that we were able to use that. The market's strong, so we're selling into a strong market, but it's not we're pulling next quarter's volume forward, but we are bringing to some degree capacity forward by selling inventories that we had. It's also just us being leaner on cash and inventory. I think, yeah, so us being leaner and operating around that, that's the piece. The other piece I guess we saw from a pull forward would be the expiration of the 30D tax credits in the U.S. So there was a bit of a rush for people to buy EVs in the U.S. It's 10% of the market, so it's not going to be dramatic overall, but that is one where demand did get pulled forward a little bit.
Analyst Rock Hoffman (Bank of America Securities): Understood. And just as a follow-up.
Executive Neil (Title): Yep. I'm sorry, Rock. I think you had asked about contract spot mix going forward. I just wanted to add one point, which is, look, I think, you know, Kent had mentioned in the prepared remarks that our contracts continue to perform. We don't have any major contracts that are rolling off until you get towards the end of 2026. But look, the demand has been so strong in China in particular where we don't sell volume on long-term contracts. So if that trend continues into 2026, just based on mix alone, you can probably expect that our 45% that we're at this year will tick down just because of where the product is going and the fact that it's not going on these long-term contracts. But it's not a shift in our long-term contracts. It's really more about geographic mix of sales.
Analyst Rock Hoffman (Bank of America Securities): Makes sense. Just as a quick follow-up, any preliminary thoughts on 2026 CapEx and, I guess, more broadly, when you would need to turn on CapEx in order to incentivize any meaningful volume growth after 2026?
Executive Neil (Title): Yeah, so I think we've worked our capex down, and we've had to be very thoughtful about that. So we would anticipate, unless we pivot to do some investments we're not thinking of right now, we will continue at that run rate or maybe a little bit lower. We'll continue to work on that to get it down. We don't think we're shorting our assets with the cuts that we've made. We're just getting more efficient at it, but we're being thoughtful and careful. That's why we leg down slowly, I would say, particularly on maintenance capital. And so without forecasting, not forecasting some investment that we might make, as a result of the market taking off, you see us in a range where we are maybe another leg down. But the legs are incremental now. We're not going to make 50% reductions. That's not in the cards. There may be 10%, something like that.
Analyst Arun Viswanathan (RBC Capital Markets): Great. Thanks for taking my question. I guess I'm just curious to get your thoughts on spodumene and the impact on pricing. So it looks like, you know, prices for both carbon and hydroxide are kind of settling out at marginal cost levels. Would you agree with that? And would it take spodumene maybe to go up to $1,200 or $1,500 to see some more robust activity in lithium salt pricing? And if so, what would drive that? Spodumene, do you feel that supply-demand is balanced or tight or loose? Or maybe you can just comment on that relationship. Thanks.
Executive Neil (Title): Right. So we commented on it just a little bit earlier, but I think you're probably right. So conversion right now is at basically marginal cost of conversion and in China. And then when you see price move, most of the value in the price movement, the conversion stays at that cost, that marginal cost, and it moves to the resource. The margin moves to the resource. So that's kind of what we've seen, I guess, for at least a year now. Most of the value moves to the resource because you have overcapacity for conversion in China primarily. It's a little bit different when you start talking outside of China but the majority of the market is in China and but the market is getting it's getting a little tight and I think that's why you see prices move up. It's probably a bit more it's a demand story but supply is not kept up demand stronger than we thought and supply growth is less than we thought and that's tightening it inventories are coming down in both salts and in spodumene in the system throughout the system. So I think it's a demand story. I guess maybe it's both because supply has not been as strong as we were originally thinking, and demand has been stronger. So the market is tightening. So it's a supply-demand piece. But all the value at the moment does move to spodumene.
Analyst Arun Viswanathan (RBC Capital Markets): Great. Thanks for that. And then could you also comment on your potential commercialization in the energy storage market? What are you seeing there and what do you kind of expect over the next few years from a demand standpoint? Thanks.
Executive Neil (Title): Well, it's the same supply chain and value chain as it is for batteries for EVs for the most part. I mean, there are people specializing in that. And the core technology, it's pretty much the same thing. From our standpoint, it's about the same. We sell the same material to just which value chain it goes to. Many cases, most cases, it's the same customer that's playing in both energy storage and the electric vehicle market. But the growth has been very strong. A lot of that is grid stability. Well, it's about renewables and storage to go with it in Europe and China to some degree, but it's also about grid stability and data centers, you could say artificial intelligence, but that system is what's driving it, particularly in North America. So, it's a pretty dynamic market. You always get the question, or you think about it, is lithium-ion technology the right technology for that? I mean, it's what's available today at scale. Supply chain has been built out, and it still has a significant cost advantage over other technology like sodium-ion. So, they don't have scale in sodium-ion yet. And the cost is still significantly higher. So I think in the near term, it's going to be mostly LFP technology. Long term, you probably see sodium coming into the mix. But I think we're kind of forecasting about 80% of that stays with lithium ion technology.
Analyst Joel Jackson (BMO Capital Markets): Hi, good morning. Kent, you know, you've talked about for a while and today about really being able to ride out the cycle here. What do you think Albemarle is going for? You know, if you're not really doing any growth beyond CGP3 and some conversion in China, and you're looking at taking CapEx maybe down a level, economics don't justify new builds or new capacity. What is, in this growing, rising sector, EV and ESS, what will Albemarle be? Are you worried about not growing proportionally with the industry?
Executive Neil (Title): Yeah, so look, a lot of the work that we're doing is to preserve that growth optionality as we go forward, but we need to see good business cases in order to do it. So my view is we're being disciplined. Look, we probably are risking some of the upside by taking the approach that we have, but we are making sure we can go through the bottom of the cycle and then take advantage of that uptick. So we will capture growth. We have opportunities. We think resources is the key to that, and we have some of the best resources available on the planet so it is about optionality and we're having you know we have to manage our balance sheet and the market opportunity out there and we don't want to get caught flat-footed but I think we're what we're trying to build is a business that is agile and we'll be able to pivot to do those investment projects when we see the right economics.
Analyst Joel Jackson (BMO Capital Markets): Okay, and the second question may be a little strange, but I mean, we've seen a lot of good data out from a lot of different industry sources about the acceleration and growth rates in ESS. Can you talk about on the ground what you're actually seeing? You know, is the hype real? Is it being exaggerated? How much tangible evidence do you have of accelerating growth rates in ESS that you can share?
Executive Eric (Title): Well, Eric can comment on that, but I think the most tangible is the volumes that we see going into it. I mean, that is not – I mean, they are shipping and going into batteries. So that's not forecast. That's legitimate. That's real. And so I think that market is there. Eric, you can comment on more specifics.
Executive Eric (Title): Yeah, it's akin, Joel, to the last question that came up around where – what's going on in this market. Is it a different channel? It's not, it's the same big battery names that are in the EV space. And I guess there are a couple of things we see certainly in China, which is the largest market and where, and really the home of LFP technology. We're seeing a lot of, in all of our discussions with both Cathode, particularly LFP cathode and battery producers in China, those cell lines are at full utilization now to meet the demand both domestically in China and abroad. The interesting thing about the grid storage market is it looks a little different from a global perspective than the EV market, meaning it's not all just about Europe, China, and the US. It's the rest of the world, and the grid demands, grid stability, renewable power are important, whereas in North America, of course, the big driver is more about AI data centers. And even now, pivoting to the US, we have a great number of battery partners, partnered with OEMs here in the US, who are taking those same facilities and looking to retrofit them to make ESS technology, whether that's moving to a lower nickel technology or to an LFP technology. And then finally, we're seeing a big uptick, and this is both an EV driver and an ESS driver, amongst all cathode produced certainly in China I'm referencing but now outside of China the Koreans.