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October 24, 2018

Volume 3 Issue 3

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Lithium Supplier Livent Conducts IPO

Livent, the former lithium business of chemical company FMC, raised $340 million this month in its initial public stock offering.

The company, one of the world’s major suppliers of performance lithium compounds, said it will continue charting an aggressive growth plan to capitalize on the proliferation of electric vehicles but added that it also intends to continue supplying the grease industry, which has long been one of the main users of lithium.

Trading of Livent stock opened at $16.25 per share Oct. 11 and hit a high of $16.98 as the company sold 20,000 shares, which amounted to a combined 14 percent stake in Livent. According to the prospectus for the offering, proceeds were not earmarked for any specific use but went to FMC, which continues to own 86 percent of Livent.

FMC said it may sell its shares of Livent stock at some point in the future.

Livent did say it plans to continue on FMC’s path of aggressively increasing its capacity both to harvest basic grades of lithium compounds and to produce performance grades used for electric vehicle batteries and other applications. Growing demand for those batteries was the main factor that caused lithium hydroxide prices to climb approximately 140 percent from 2014 to 2017, creating problems for the grease industry, which also uses the compound to make lithium soaps that thicken more than 70 percent of the world’s grease.

Sales of battery-powered cars – and therefore demand for the lithium that they use – are projected to continue growing at a rapid rate in coming decades, so Livent and other major lithium suppliers are striving to boost production capacity. Livent says it aims to increase its capacity to make lithium hydroxide from 10,000 metric tons per year of lithium carbonate equivalent in 2016 to 55,000 t/y of LCE by 2025. It also plans to raise its output of lithium carbonate and lithium chloride – the raw materials used to make performance lithium compounds – from 18,000 t/y in 2017 to 60,000 t/y by the end of 2025.

In its prospectus FMC cited forecasts by metals industry consultancy Roskill that global demand for battery-grade lithium hydroxide will grow at a compound annual rate of 35 percent from 20,000 tons in 2017 to 398,000 tons in 2027. Roskill estimates that this will account for 96 percent of the increase in performance grade lithium compounds during that decade.

In contrast, demand for non-battery lithium hydroxide used in greases with conventional and complex lithium soap thickeners is forecasted to rise by a compound annual rate of just 1.5 percent per year from 14,300 tons in 2017 to 16,700 tons in 2027.

FMC has emphasized that catering to electric vehicles will be Livent’s main focus. “As a result of our focus on supplying performance lithium compounds for use in the rapidly growing EV market, we expect the shares of lithium hydroxide, energy storage and Asia as percentages of our total revenue by product, applications and geography, respectively, to increase,” the company stated in its prospectus.

The company did not explicitly state whether the volumes of lithium hydroxide that it supplies for greases will rise or fall, but it did list high-performance greases as among the applications on which Livent will focus.

Grease suppliers wanting to procure lithium from Livent may need to enter long-term contracts. The company stated that 58 percent of the revenue that its lithium hydroxide earned during the first half of 2018 came from long-term contracts and that it expects that portion to increase.

FMC said Livent may invest in new production facilities. It currently produces lithium carbonate and lithium chloride in Argentina, where it owns salt flats that harvest the chemical. It owns or contracts with facilities that make performance lithium compounds in North Carolina, the United Kingdom, China and India.