Published: Thursday, 05 February 2015
FMC has been a leading global producer of lithium and soda ash for several years. With the sale of its soda ash arm it has now concentrated its mineral focus onto lithium which it believes will enjoy an uptake in prices as interest in energy storage picks up.
US-based FMC Corp. has reported record soda ash production for the final quarter of 2014, while its lithium operations continue to improve, despite the challenges it faces at its facilities in Argentina.
According to its full year 2014 results, released late yesterday, FMC’s minerals segment recorded earnings of $166.7m in 2014, a 30% rise on 2013. During Q4 2014, earnings reached $47.9m, a 32% rise compared to Q4 2013.
Lithium revenues for the three months ending December 2014 were 3% lower when compared to Q4 2013. However, revenues for the full year were up 15% and earnings in the business were up approximately 125%, due to strong operational performance and higher volumes.
Last year, restructuring cost the lithium segment $9.1m, while the continued work at an environmental site incurred a corporate charge of $6.2m.
Speaking during a conference call today, Pierre Brondeau, CEO of FMC, said that its lithium portfolio had been "mixed" in 2014. He stated that there was an increasing interest in lithium, leading to a "tightening in carbonate supply and demand."
FMC did not disclose its lithium and soda ash production levels in its quarterly results.
Overall, the company posted revenue of $1.1bn in Q4 2014, a 3% decline on the previous year.
Shifting focus
With the agreed sale of its Alkali Chemicals business — the largest natural soda ash producer in the world — to Tronox, FMC will change its name to FMC Lithium.
Brondeau said that this was part of a wider company strategy to create "a more focused portfolio."
"In Lithium, we are optimistic that demand for downstream products, particularly for energy storage applications, will continue to grow rapidly," said Brondeau.
FMC anticipates higher prices for lithium hydroxide and carbonate based on the fact that the energy storage sector is growing at double digit rates. It expects earnings to be in the range of $15m to $25m in 2015.
The company produces a variety of lithium chemicals at its Hombre Muerto operation in northern Argentina. It noted that operational costs have been hit by Argentina’s import restrictions, which make it difficult to deliver certain critical engineering components.
"Despite strong underlying performance in our lithium business, we are unable to produce consistent results across multiple years due to the challenges of operating in Argentina's high-inflation environment," Brondeau said.
"We want to reduce costs as much as possible," Brondeau added, noting that, "adverse currency conditions in Argentina could be a significant headwind to earnings".
Brondeau also said that FMC would continue to take an interest in the electric vehicles (EVs) market despite a decline in energy prices.
"Gas prices are not the drive when you decide to buy a Telsa; it is part of it but it is not the driver," Brondeau said, pointing out that those who were likely to be interested, "will look beyond one year gas prices".
FMC expects the agreed sale of Alkali Chemicals and the agreed purchase of Denmark-based agricultural supplier Cheminova to be completed in Q1 2015. FMC believes that the sale can cut its debt pile following its $1.8bn purchase of Cheminova in September 2014.
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