Thank you, Nadia. And welcome, everyone, to Albemarle's second quarter 2022 earnings conference call.

Our earnings were released after the close of market yesterday, and you'll find the press release and earnings presentation posted to our website under the Investors section at albemarle.com. Joining me on the call today are Kent Masters, Chief Executive Officer; and Scott Tozier, Chief Financial Officer; Raphael Crawford, President of Catalyst; Netha Johnson, President of Bromine; and Eric Norris, President of Lithium are also available for Q&A..

As a reminder, some of the statements made during this call, including our outlook, guidance, expected company performance, and timing of the expansion projects may constitute forward-looking statements within the meaning of federal securities laws. Please note the cautionary language about forward-looking statements contained in our press release and earnings presentation.

That same language applies to this call. Please also note that some of our comments today refer to non-GAAP financial measures.

A reconciliation to GAAP financial measures can be found in our earnings release and the appendix of our earnings presentation. And now I'll turn the call over to Kent.

Thanks Meredith. Thank you all for joining us today.

On today’s call I’ll highlight our second quarter results and achievements. Scott will provide details on our financial results, outlook, balance sheet and capital allocation.

I’ll then close our prepared remarks with an update on our operating model and strategic growth projects aimed at further strengthening our long-term financial performance and sustainable competitive advantages. Albemarle’s leadership position in Lithium and Bromine, coupled with our team’s ability to execute to the current inflationary environment led to another led to another quarter of strong results.

In the second quarter, we generated net sales of $1.5 billion nearly double the prior year. Second quarter adjusted EBITDA of $610 million was over three times the prior year.

Continuing the trend of EBITDA significantly outpacing sales growth. The supply demand balances remain tight in the markets we serve.

Strong market prices and our continued success in contract renegotiation drove the tremendous strength we're experiencing in our lithium business. As a result, we are again raising our 2022 outlook and now expect to be free cash flow positive for the year.

Scott will review the key elements of that outlook later on in the call. We are also successfully executing our growth strategy.

Our Kemerton I lithium conversion plant in Western Australia achieved first product in July. I want to especially congratulate our teams in Western Australia for their hard work and dedication and achieving this goal.

And lastly, we made a major announcement regarding plans to build an integrated lithium mega site in the United States. This will support our western expansion and the development of the battery material supply chain in North America.

Now I'll turn the call over to Scott to walk through our financials.

Thanks, Kent. And good morning, everyone.

I'll begin on slide 5. During the quarter, we generated net sales of approximately $1.5 billion, a year-over-year increase of 91%.

This is due primarily to increased momentum in our pricing efforts as well as higher volumes driven by strong demand across our diverse end markets, especially for our lithium and bromine businesses. We saw volumes and pricing grow in all three of our businesses.

For the second quarter, net income attributable to Albemarle was $407 million, compared to $425 million in the prior year. As a reminder, the year ago, quarterly results included a onetime benefit of $332 million related to the sale of Fine Chemistry Services.

EPS for the second quarter was $3.46, a year-over-year improvement of 300%, excluding the onetime benefit of the FCS sale. This overall performance was driven by strong net sales and margin improvement, partially offset by the ongoing inflationary pressures we are feeling across all three businesses.

Turning to slide 6, second quarter adjusted EBITDA was $610 million, up 214% year-over-year. The primary driver the strong growth was higher lithium EBITDA.

Lithium was up nearly $400 million compared to the prior year, driven by momentum in our contracting efforts and overall higher market prices. That's an increase of 350%.

In fact, lithium second quarter EBITDA was greater than the EBITDA it generated in the full year of 2021. Bromine was also favorable year-over-year up nearly 50%, reflecting higher pricing driven by tight market conditions and an uptick in volumes, partially offset by raw material and freight inflation.

Catalysts was negative in the quarter as higher sales volumes and pricing were more than offset by cost pressures, particularly for natural gas in Europe and raw materials. And finally, we also experienced an overall FX headwind of $14 million for the total company.

Moving to slide 7, we are further increase in our 2022 outlook from our last announcement in late May, primarily to reflect the expected continued strength in execution in our lithium business and further improvements in bromine. We now expect 2022 total company net sales to be in the range of $7.1 billion to $7.5 billion, up about 115% to 125% versus last year.

Adjusted EBITDA is expected to be between $3.2 billion and $3.5 billion, reflecting a year-over-year improvement of up to 300%. This implies EBITDA margins are expected to improve significantly to a range of 45% to 47% for the total company.

Together, this translates to updated 2022 adjusted EPS guidance in the range of $19.25 to $22.25. That is about five times more than 2021.

Additionally, we're increasing our net cash from operations guidance to a range of $1.4 billion to $1.7 billion. Driven by our updated sales and margin expectations.

We are maintaining guidance for capital expenditures of $1.3 billion to $1.5 billion as we drive our lithium investments forward to meet increased customer demand. Together, the midpoint of our guidance implies approximately $150 million in positive free cash flow for the full year.

And further if you assume our realized pricing remains relatively flat next year, we expect to continue to generate positive free cash flow in 2023 even with continued growth investments. Security supply remains the number one priority for our customers, and we are continuing to partner and work closely with them.

We are pushing hard to meet those accelerating customer growth requirements. Regarding the quarterly progression of sales and EBITDA, on our last call, we indicated that we expect results to be relatively evenly split among quarters.

Given the underlying strength across our portfolio, and continued momentum in our contracting efforts, we now expect second half adjusted EBITDA to be roughly 120% higher relative to the first half. Turning to the next slide for more detail on our outlook by segment.

Our lithium businesses full year 2022 EBITDA is expected to be up more than 500% year-over-year, up from the previous outlook for growth of approximately 300%. The improved outlook reflects renegotiations of pricing on legacy fixed price contracts, and continued strong market pricing flowing through our index referenced variable price contracts.

We now expect our average realized selling price to be up more than 225% to 250% year-over-year. This is the result of our successful efforts to renegotiate legacy contracts and implement more index referenced variable price contracts, as well as a significant increase in index prices.

From the beginning of the year to today, indices are up 60% to 130%. And note that our outlook assumes Albemarle’s expected Q3 realized selling price remains constant into the fourth quarter.

There's no change to our lithium volume outlook for the year. We continue to expect year-over-year volume growth in the range of 20% to 30% as we bring on new conversion assets, plus some additional tolling.

There's potential upside to our outlook if market prices remain near current levels, or with additional contract renegotiations or additional tolling volumes. And conversely, there's potential downside with material, the clients and market pricing or volume shortfalls.

For bromine, we are also raising our full year 2022 EBITDA expectations with year-over-year improvement in the range of 25% to 30% compared to the prior outlook of 15% to 20%. This revised guidance reflects continued strong demand and pricing from end markets such as fire safety solutions, and oilfield services.

Plus other macro trends such as digitalization and electrification. We expect higher volumes of 5% to 10% following our successful execution of growth projects last year.

For catalysts, full year 2022 EBITDA is expected to be down 25% to 65% year-over-year. This is below our prior outlook due to significant cost pressures, primarily related to natural gas in Europe, certain raw materials, as well as freight, partially offset by higher sales volumes and pricing.

The large outlook range for Catalysts reflects increased volatility, and a lack of visibility particularly related to the war in Ukraine. Given the extraordinary circumstances and the resulting changes in oil and gas markets, the business continues to aggressively see costs pass-through, particularly for higher natural gas costs.

The strategic review of the catalysts’ business is ongoing, but it is taking longer than we anticipated. As soon as we have any news, we will provide an update.

Turning to slide 9 for an update on our lithium pricing and contracts. This slide reflects the expected split of our 2022 lithium revenues.

Battery grade revenues are now expected to make up approximately 85% compared to 70% to 80% in our prior guidance, due to successful contract negotiations, and higher market indices. Of the total battery grade revenues, 15% is expected to be from short term spot purchase orders.

65% is expected to be from index reference variable price contracts. Pricing on these contracts generally reset with a three month lag and a number of these contracts do have floors and ceilings in place.

The remaining 20% comes from Legacy fixed contracts with price reopener normally every 6 or 12 months. And since we last updated the outlook in late May, we have successfully repriced a portion of these contracts to better reflect the current market price environment.

This segmented approach to contracting gives more flexibility for our customers, while allowing Albemarle to preserve upside and ensure returns on our growth investments. Our operations and project teams are also delivering volumetric growth.

Slide 10 shows the expected lithium sales volumes including technical grade spodumene and tolling sales. In 2022, we expect volumes to improve 20% to 30% year-over-year.

This growth is largely driven by our expansions at La Negra and Kemerton, the acquisition of Qinzhou as well as some additional tolling volumes. Looking forward, we expect volumes to grow approximately 20% per year from 2022 to 2025, driven primarily by the ramp up of new conversion assets.

We see room for further upside from additional conversion assets such as our Greenfield in Meishan or additional tolling volumes. Turning to slide 11, our strong net cash from operations and solid balance sheet give us ample financial flexibility to execute our growth strategy.

Our balance sheet is in great shape with $931 million of cash and available liquidity of $2.6 billion. Current net debt to adjusted EBITDA is approximately 1.7x with rising EBITDA from higher pricing and volumes, we expect leverage to trend lower in the near term.

This will -- this gives us plenty of capacity to accelerate our growth investments or value creating M&A. During the second quarter, we extended our debt maturity profile through a public offering of senior notes, proceeds total approximately $1.7 billion, a portion of which was used to redeem senior notes maturing in 2024.

92% of our debt position is at a fixed rate, which buffers us against the impacts of rising interest rate environment. Before I turn the call back over to Kent, I wanted to briefly review our capital allocation priorities and our ability to adapt to market changes while building durable capacities to support growth.

Our capital allocation priorities are unchanged, we remain committed to strategically grow our lithium and bromine capacity in a disciplined manner. Capacity growth will also be supported in organically by continuously assessing our portfolio and pursuing bolt-on acquisitions at attractive returns to strengthen our top tier resource base.

A perfect example of this strategy is the $200 million Zhangjiagang’s acquisition that is expected to close in the second half of the year. Maintaining financial flexibility and shareholder returns are also key capital allocation priorities.

We remain committed to maintaining an investment grade rating and a strong balance sheet to provide significant optionality to fund future growth. Finally, we also plan to continue to support our dividend.

We are laser focused on the durability of our business. The management team and the board regularly review our capital allocation priorities and have identified levers we can pull to quickly adapt to changing market conditions if needed.

These include slowing non growth CaPex, reducing discretionary spending and hiring, shifting production volumes to highest demand markets, and accelerating partnering and tolling arrangements to support cash generation. Additionally, a downturn may allow us to take advantage of lower priced acquisitions, capitalizing on the strength of our balance sheet.

In summary, we believe Albemarle’s ability to maintain a focus on growth through all market conditions is strong, thanks to our operating model that Kent is going to discuss next.

Thanks, Scott. So let's turn to slide 13 to discuss our cost structure, and how we are managing inflation.

Our vertical integration and access to low cost resources for lithium and bromine allow us to avoid the worst impacts of inflation and control our cost structure. For example, while approximately 45% of our costs come from raw materials and services, actually 20% of those costs relate to our own spodumene.

The implementation of our operating model the Albemarle way of excellence, it’s also helping manage costs. In 2020, we identified our supply chain as a key area for improvement.

At that time, we reorganized to form a global supply chain function and implemented a new Enhanced Procurement strategy that team's efforts are now paying dividends. Last year, our procurement team set a target to achieve $90 million in value creation by 2022 year end, we are on track to meet or exceed that target by about 40%.

About half this from cost savings with lower year-over-year cost. And about half is from cost avoidance, where procurement efficiencies have allowed us to realize below market increases.

An example of cost savings includes logistics efficiencies, minimizing material handling, maximizing equipment capacity and shortening haul routes. Cost avoidance includes using fewer suppliers and pooling buying for key raw materials and services to offset inflation.

And other cases, we've shortened supply chains to improve resilience and reduce total cost. This success is driven by diverse teams, including supply chain, procurement and production scheduling.

Thanks to everyone across the enterprise and around the globe, it took commitment from every individual to make this happen. Our operating model is also focused on building the structure, capabilities, discipline and design approach to enable faster capacity growth.

As a leading lithium producer, Albemarle is investing in lithium production around the world, including China, Australia and the Americas. This year, we plan to deliver projects that more than double our annual capacity from 85,000 tons to 200,000 tons by year end.

We are also progressing a portfolio of projects that can grow our conversion capacity to as much as 500,000 tons per year on a 100% bases. As you can see, the near term projects are largely in the Asia Pacific region.

Longer term, we expect to transition to a more localized supply chain in North America and Europe. Turning to slide 15, our capacity additions in Australia and Asia significantly enhance our ability to leverage our low cost resource base.

In terms of lithium conversion capacity, we've made progress on the regulatory approvals for the acquisition of the Qinzhou conversion facility. We continue to expect that acquisition to close in the second half of 2022.

In the meantime, we continue to toll spodumene through this facility. As I mentioned earlier, Kemerton I has achieved first product.

This important milestone signifies that the manufacturing processes and equipment can meet the project's design objectives. Our focus now is on qualifying our product with our customers.

At our China Greenfield expansions, construction of a 50,000 ton per year lithium hydroxide conversion plant it Meishan is well underway. Importantly, with our ownership stakes at the Wodgina and Greenbushes lithium mines, we already have access to low cost spodumene to feed these conversion facilities.

The restart of the Wodgina lithium mine by our JV partner Mineral Resources is going well. We continue to negotiate agreements to expand and restructure the MARBL joint venture and we'll update you when we have more information.

We also have a 49% stake at Greenbushes. One of the best lithium resources in the world.

The Talison joint venture is ramping up chemical-grade plant two or CGP2 and has approved construction of CGP3, which is broken ground. Our intention is to ramp up lithium resources in advance of conversion assets.

In which case in the near term, we could be net long spodumene. If that's the case, we will elect to toll spodumene or sales spodumene into the market.

If it's economical to do so, and if it allows us to bridge until new conversion assets ramp up. Albemarle is the leading global lithium producer with a significant US presence and access to some of the world's best resources.

As such, we are well positioned to establish world class production of battery grade lithium that enables the localization of the battery supply chain in North America. This would offer important benefits to us based automotive OEMs seeking a de-risked local supply chain, more reliable logistics and a reduced carbon footprint.

We plan to leverage our Kings Mountain lithium mine, a top tier resource and build a multi train conversion site in the southeast. This site would be capable of handling mineral resources from Kings Mountain, as well as recycled feedstock.

This mega flex site would leverage Albemarle’s best-in-class know-how to design, build and commission both resource and conversion assets. This creates significant competitive advantages for Albemarle and its customers, while also addressing the need for localized lithium supply to support growing demand in North America.

In closing on slide 17, we expect to achieve significant growth milestones this year, thanks to strong end market demand, as well as actions that we've taken to invest in profitable growth for lithium and bromine. Those investments are now paying off as we ramp up volumetric growth.

To maintain our financial flexibility to fund growth through cash and our balance sheet, and to leverage our operating model to manage cost and execute our growth projects. So this concludes our prepared remarks.

Now, I'll ask Nadia to open the question, open the call for questions.

Yes, good morning. Kent, your volume growth has been very impressive.

Can you discuss your key steps you're taking at Kings Mountain in terms of building the mega site? What environmental permits do you need?

Are you engaging with the community today? And the same question on Silver Peak?

When you expand that what kind of production ramp up can you see?

Right, so the two sides are slightly different scale. And so Kings Mountain is significant site, Silver Peak is smaller, but still the expansion is important.

I mean, that is the only we're kind of lithium sourced in the US today. But at Kings Mountain, we're early in that process.

We're still in pre-feasibility. So we've got to do permitting.

But we have done a lot of work already. We've done all of the drilling necessary, well, we continue to do some of the drilling to make to understand the resource at Kings Mountain.

But we still got to do permitting, we've engaged with the community. We've been doing community meetings for almost six months now maybe not quite six months early in the year that we started that process with public meetings, we've opened an office in the town so people can come in and ask questions.

So we really engaged with the community early on. And we're working on the permitting processes that we have to go through but it's in pre- feasibility study.

We feel confident we'll be able to get there at Kings Mountain, but there's a lot of work to do, including all the permitting.

Great, and then you have a strong balance sheet. You have been free cash flow positive this year.

You talked about M&A. Can you give us some idea of what you would potentially be looking at?

Would you look at technologies like DLE? Or what geographies would you look at?

Thank you.

Yes, well, I think it's what we've really always talked about from an M&A standpoint. So we seeking virgin assets that we think are attractive so we would do that consider as a bolt-on technologies if we see technology to help us so direct lithium extraction, could be part of that.

And then resources. So we continue.

We're good on resources pretty close to the end of the decade. But we need to be planning now to build out our resource base past that.

So I think those are the three primary categories.

Great, thank you so much for taking my question. Just turning to slide 18.

The third and the fourth point, can you just give us a quick update on terms of some of the contracts negotiations on additional tolling, I mean, on the former, what percent are still up for renewal, that have essentially given you the momentum to raise guidance twice in the last quarter and a half or so. Just any color you could offer that would be very helpful.

Thank you.

Good morning, Chris. It's Eric here.

So what we've been able to do, just to recap this year is we've been able to renegotiate contracts that have opportunities for reopener or with customers who are seeking additional line commitments in the out years. And in order to entertain those discussions we've opened up, have been able to ask for higher prices on legacy contracts.

We don't have any contracts that are expiring anytime soon. Most of our book of businesses is committed, we're very tight in the next year or two as we anticipate bringing on new capacity from some of the projects I can't describe.

But that doesn't mean we won't have opportunities, there might be still some contracts that shift, the big thing that's happened in the past year has been the movement to know having two thirds under our index reference variable price, whereas the foremost that was fixed. Now our movement is going to be very much driven by market prices and some potential changes on the margins, but few contracts, or potentially, if prices remain where they are some resets on some of the fixed prices, contracts.

Got it. And just a quick follow up just you've also seen OEMs make a very conscientious effort and yes been a little bit more decisive and attempting to lock-in incremental supply through, let's say, the middle in the balance of the decade.

I mean, has that been fully reflected in your negotiations in terms of just what you're willing to commit to them? And as we progress over the next year or two, it seems like there's still a bit of a bottleneck in terms of the OEMs versus what's available in lithium in terms of better grade hydroxide.

What else are you willing to do to help facilitate the growth plans? And how should we think about that, just from a broader market perspective you versus some of your peers.

Thank you.

We're working with our customers. And we're being very aggressive about adding capacity.

So I think you see that in our investment plans, and they're coming through now. And we get better at that.

So the period, when those come on, we're able, we believe we're able to execute better from a conversion. We're good on resource for a number of years.

But we still need to add that. And we work with the customers to do kind of unique arrangements.

We're having conversations with those but with our customers about those, but they have to work for us. And we're working towards some arrangement like that.

So and they may or may not come to pass. I am not again say that because those are conversations and discussions that we're having.

But we're in those discussions. And we're committed to build capacity to serve the customer base over the long term.

Yes, I think what's also unique, Chris, just to add is that we are speaking with OEMs, and battery companies on three different continents. Out in the out years, as you saw on the charts, we're looking towards Europe.

So that's the further south, where we are established well now is in Asia. And where we've announced next we're headed is North America.

And we've got the resource bases can't describe to be able to do that. So between that localization, which is very important to these OEMs and battery producers, the sustainability and principles in which we operate.

And then some of the new technology areas we're focused in for next generation technology. The partnerships we strike are going to look -- are going to be at par with one of those dimensions.

And we're not in a position where we need to raise capital. So we can look at and have been discussing with various producers, various OEMs, upfront and potentially forms of investment.

But that's not a requirement for us. We don't need that capital.

It would only be something we do as part of a broader deal to advance our strategic agenda and help our customers win in the market.

Thank you. Good morning.

Question for Eric. Eric, just on your slide 9, can you talk about the difference of pricing between the index reference contracts and the spot pricing in Q2.

Another compare versus Q1.

I'm sorry, David, just to make sure I understand your question. You're wondering how they compare now the prices versus back in Q2.

Sorry to ask --

The price difference between index referencing stock prices in Q2 versus a differential in Q1?

Oh, okay. I'm sorry, we don't give enough detail and disclose that.

But I will say that you know spot prices you would know by looking at indices are, they vary, but currently in the low 60s, and in China, they're actually some of the -- some contracts in outside of China are even higher now at $70. We are not there yet on our index pricing, which is one of the reasons our guidance and prices stay where they are, we could continue to have a rising mix, increase in our variable based contracts.

Understood. And just on the southeast project, can you give now any cost or timing indications for their project?

David, we have not given out any costs yet, since it's really prefeasibility. So timing wise, it's going to be later in the decade when that would come online, clearly, it needs to have a feedstock.

With a mine, that's probably the long pole in the tent.

Yes, hey, guys, this is James Cannon on for Josh. Just wondering why it seems like the sale dropped through the EBITDA this earnings upgrade is much higher than the last updates to the year.

Can you give any color as to why that is? And similarly on SCF?

Has anything in the underlying business change to improve that?

Yes, James, I think that the big difference is this upgrade has been purely driven by price. So you're seeing that drop through.

And we're not seeing the same impact from spodumene which was a drag. So the spodumene price increases was a drag on our earnings in the last guidance.

As you look at free cash flow, we continue to see improvements. They're driven by the growth in EBITDA and we're because of some of the tolling efforts that we're doing, we're actually absorbing some of the inventory that we didn't have before.

So seeing a better working capital profile as a result.

Thanks so much. Can you just talk a little bit about the ramp up in Kemerton and any surprises you're seeing at this point, any concerns around labor or any equipment that you're concerned about here as we start moving forward.

Yes, so I mean, look, where we've just -- we made first product last month, and we're just starting to ramp up. So I think the key thing for us, when we were able to make product and are comfortable with the quality, it means that our process chemistry is right and so there are no surprises really around the kind of core process chemistry around that.

So that was a big milestone, that's kind of the first big hurdle that you want to clear. And then now it's just getting everything run at scale, and get purities up to the, to our specifications.

So as you kind of run in a new plant, we continuously see that the spec on battery grade material is very high. And so it just takes a little bit of time to get to that and it takes volume to do that.

So it's just about ramping up. We feel very good about the process chemistry and that we that the plant will be a good operating plant.

It's just that we need a little bit of time to ramp it up and get to those purities we need and then we have to go through the qualification process with our customers. So that's on the doubt.

That's on the first train second train is still on schedule that we've indicated in the past and the learnings we had on train one we've stumbled a bit on train one with issues and getting it there. We think, we -- as we saw those we've rectified that for train two.

There are still labor issues in Western Australia but I think we're through the worst of that, because we're past most of the big construction elements of it. So now we're into commissioning on one and just finishing up construction on two.

There's still labor issues in the operating facility to some degree, but that's kind of business as usual in Western Australia, I would say.

Thanks so much. And then on the North America, potential expansion, can you just talk about philosophically how you're thinking about contracting that out.

Is that something where you would think about taking in prepayments to lock-in volumes of customers? How far down the road, are you in terms of the thought process and the discussions on off tech for that facility?

Well, we're having discussions with people, but we're not, I would say, we're not very far down there. We're not locked anything in and we have some ideas around some unique models.

And we're having conversations with people about that.

Thank you and good morning, everyone. Kent, I think when you discuss the mega project, you indicated an ability to take recycled feedstock, I just was curious.

One just for that mega project, how much of a contributor you thought that would be. And whether your customers are telling or indicating that obviously, maybe more in the out years, and anytime soon, they would like to have some percentage of recycled feedstock in the mix of lithium that they procure.

Yes, so I mean it's a big part of the conversation. And it's about recycling, creating a recycle loop through the system.

It is the years out, but we have to design it in. And so we think we can build the -- we'll build it in phases, but that ultimately will operate a recycled facility, the lower volumes at time, but we'll have time to ramp that up and really learn how to use that optimize that.

And that would kind of be our facility that we would learn off as well. So it's part of we're trying to think ahead and design that and design that into a facility so we get scale with the other operating facilities and have the benefit of having an operating plant next door.

Hi, good morning. This Cory on for Kevin.

Going back to slide 9 with the contract breakdown in lithium, I am curious versus last quarter, you have more index referenced variable price contracts, right? 65% versus 50%.

And the fixed contract pieces down to 20% from 30% of your battery grade revenues. Do you have a number in mind for how low you can go on in terms of heading fix contracts?

Are you trying to get to all index reference price contracts?

Yes, so I think I mean, we've talked about this for a while. And we've always said we're not sure where this ends up, it is a little bit about how our customers want to contract and then the direction that we're trying to go.

So what you're seeing in that is just how the math is evolving. So we've had -- we've upgraded, we've changed contract from those fixed.

But remember, the fixed prices adjust over time, so they are not really fixed. And we're trying to shorten that period that we as they adjust.

So I'm not -- I don't really want to call the mix. I mean, we had one time said we thought it might be a third, a third, a third between those categories.

And it's turned out to be quite different. We do want to have some in the spot category that gives us flexibility.

But I don't know, it's hard to say where it goes. We're not necessarily absolutely driving it to that variable price.

But we kind of liked that model where it's index referenced and variable. And I think our customers are getting comfortable with it as well.

The other moving piece that as you look at that chart between different presentations is of course, where the market indices are. And so that can drive some mix shifts in those percentages, as you go forward.

Got it. And then I guess to stick with that slide similar question in terms of change quarter- over-quarter, last quarter you mentioned product offering, this quarter you mentioned the partnership offering and in the context of one of your competitors receiving a large upfront payment for future capacity.

Have you approached anybody about similar upfront payments for future lithium capacity? Or maybe you could talk sort of the philosophical approach to how you want to contract future volumes.

Thanks.

Well, I think we've migrated our philosophy around pricing contract over time. And we talked about that quite a bit not that's coming to fruition.

They are unique models we've been having. We've had discussions for years with people about prepayments and investments and things like that.

We've not done that yet. It's not that we're opposed to it.

That has to fit in our philosophy, and it has to work for us. And that -- and it's probably more relevant a few years ago, when we needed more cash for our investments and tool.

It's less important for us today. But we're still open for those investments, but we consider them strategic as part of a relationship and not just because we need to cash.

Thank you and good morning, everyone. As you resign these lithium contracts, what's your philosophy towards the floor and the ceiling in those contracts?

Are you widening that range? Are you narrowing it?

Is it kind of staying the same versus what you held in general last year?

Yes, well, I would. I mean, it's a philosophy, but they are widening and going up.

So there, it is definitely not narrowing so widening. And they're moving up.

I guess that's our philosophy.

I guess that I should assume that the floor is also moving up. Is it fair?

Absolutely.

And as a follow up question on Wodgina, is the restart contributing in any meaningful way to your second half results this year? Or is it mostly 2023?

And thereafter story?

So they'll probably be some volume coming through Wodgina in the second half, but it's not, I don't think it is material. So that'll start impacting in ‘23.

Hi, thanks, good morning. On slide 10, you gave your volume guidance, again per year.

So you're going to something like 180,000 tons or something else I’ll see in ‘23? Could you maybe risk adjust that?

How much of that incremental for next year is in the bag? How much maybe have to work for a bit harder and kind of get the ranges of how you get up to that number?

So I think that I mean, if I understand your question from a volume standpoint, right, so there'll be -- it's ramping up at La Negra and Kemerton and some tolling volume. So it's -- we'll be producing tolling from Wodgina and ramping up at the facilities at Talison.

And so it's pretty much within our control. So that's even put the risk however, you categorize each one of those, but it's probably we don't have to do anything extraordinary to get that.

We have the plants that we built and now starting up, have to run and produce it volume. And then we just continue to ramp up La Negra, and we're going to have some toll volume and some of the Wodgina product before we're able to build conversion.

So that that might be -- we've got -- the tolls we're using we use before. It's new product form.

So there's a little bit of risk in that, but not -- it's not extraordinary.

Can I just add the other component is just the Qinzhou acquisition. So we start to close that.

So it's progressing well. But again, there's potential risks but that just doesn't close.

Yes, no, that's right. So that's probably the biggest -- that's probably the bigger risk in it.

Okay, then my second question would be the DoE seems to be throwing around a lot of money to battery metals to a lot of smaller companies these days, grants and loans, things like that. You could probably qualify for a bunch of this money.

It's not a massive amount of money from where you guys sit, but it's probably a nice little kicker. Can you talk about that?

Yes, I mean, look, it's money that's available strategically. It's in right, and we're working on that.

So we're -- nothing that we can -- nothing we can announce today. But we're working on it.

Hello. Hi, this is Sean on for Steve.

Just in terms of returning back to Wodgina and Kemerton production. Can you just please walk through how the volumes are fall into there then also in terms of Greenbushes, and how the COGS and the cost are monitoring throughout the year.

So let's just I mean, Wodgina, I mean Wodgina, we are running Wodgina today, we're ramping up. But we will eventually told that we'll pull that volume until we get plants on that we can process through that.

Kemerton is just it's a matter of ramping we've and we've kind of we've said historically, we bring a plant on we kind of our planning is we give it two years to run the full capacity, now we would hope to beat that. But that's kind of what we built in.

That's how we build into our planning processes. And I know the other was about Talison.

So that oh, that's the expansion, CGP2 is operating, and CGP3, which is the next one is we've broken ground on that. So we're ramping up.

We're, CGP2, we're commissioning and ramping up, and we've just broken ground on CGP3, I think that's the right.

That's correct. CGP3 would come on and would be available on several years.

And it would support some of the capacity expansions that are in one of our charts to talk about. Further China expansion comes in three, four.

And then of course, as you already pointed out, Canada, the MARBL joint venture, some of those China plants, at least one would be a part of the joint venture potentially, and we would take that material.

Thank you. Thanks for all for taking my questions today.

Kent, I just wanted to follow up on the conversation around the mega, flex site. I believe the target was 100,000 tons per annum of conversion capacity.

I just wanted to confirm whether you all felt that Kings Mountain and recycled feedstock would be enough to feed up to that capacity as a resource eventually worth it. It sounded like earlier, perhaps Eric was discussing perhaps another need for another asset to support that.

Yes, so I'm thinking and again, it's prefeasibility. And it's still we're trying to make sure we understand exactly the resource at Kings Mountain.

So we're doing more work on that. But we think that we could feed that mega, flex facility with Kings Mountain plus recite ultimately at steady state with recycled material that get to the scale that you're that you referenced 100,000 tons a year.

Okay. And then I just want to follow up earlier on some of the conversations around upside volumes, it looks like in the current chart that you all, sort of are still assuming this 10,000 to 20,000 tons per annum of toll volumes, which is I guess, basically the levels that you're at in 2022.

And how significant or how much available capacity is out there that you could theoretically toll into? Because I guess there's also the strategy of selling spodumene into the market, which seems like a pivot from sort of previous views that you all had, but just wondering volumetrically how much capacity upside do you think that there is in the market?

So Eric can talk about the tolling, but just on spodumene, I mean, we're just being a little more flexible, that's a bridging strategy that we've not changed strategy long term about selling spodumene, we want to convert and sell to our end customers, the products that they use, the lithium salts. So if we have -- if we ramp up plants, you can't do all this perfectly right between conversion and mine.

And we've decided to push the resources in advance to the mines because they have longer lead times typically. And we get them up and operating and if we've got resource available before we have conversion capacity will either toll it or we'll sell spodumene rather than let it and sale on the ground.

Okay, so and to answer the question, there is no deviation from the strategy, no. Thank you.

Yes. That's right.

Yes, there's no deviation from the strategy, as to your question about the availability of tolling volume. There's still a healthy market of conversion capacity being built or operating in China without available spodumene to source against that.

So it varies by year. And China's and a lot of these projects, it can be opaque.

Sometimes you get the exact numbers. It's a big market, but it can be sometimes 60% to 70% utilized.

So that implies that there's capacity out there in fact, we know this we are tolling now that's available or coming on, that we can take advantage of. But that is a bridging strategy to our own conversion assets and one would you prefer to do as opposed to selling spodumene directly into the market.

Great. Thanks for taking my question.

Yes, so I guess I just wanted to ask more high level question. So you noted that obviously your contracts have your results or guidance has some upside if market prices stay where they are, but also some downside if we do receive from these present levels?

So what would it take for the market to kind of go back to prior levels, obviously, $60 to $7 is a -- as a new normal? So is it really a new normal?

Do we ever go back down into the lower 20s or 30s or 40s? Is there been any demand destruction or changes to the adoption curves that you've been observing, especially as the cost of lithium rises in the battery and the vehicle?

Right, so that may, look, we're not going to call the long term price, because that we don't know that. And I think it will move up and down, it's not going to just go, not going to sit where it is forever, that's probably pretty confident in saying that, it will move around over time.

But we see the market being tight on lithium for pretty long period of time, and then there might be periods like periods of oversupply, and that we see that several number of years out, but then that disappears pretty quickly. Soo we model that I'm sure all of you guys model that and everybody has their own opinion on it.

But prices are going to move, they're going to move around. And we're not -- we can't call it.

We do know that the cost to produce to get to the volume of the market needs goes up quite a bit from what we see the cost curve today, out over time, could it move into the 20s and 30s? At some point?

It absolutely could. But we still -- we see the market being tight for a pretty long period of time.

[Multiple Speakers]

You had another question that had to do with cost in the vehicle and technology. I mean, as you know, lithium is a small part of the cost of the battery.

But it is seen as significant, as you pointed out escalation its costs over the past year. I think the other phenomenon that's important to note is the technology phenomenon around innovation and driving out.

But longer range, energy density and penetration doesn't come from lower cost raw materials, it comes from innovation and energy density and more dense materials. So that's the movement towards higher nickel.

That's the movement towards more elaborate chemistries on the anode side, and maybe potentially someday solid state. So those innovations are well and continue down that experience curve notwithstanding the price of lithium, which again, is a fairly small part of the cost of the battery.

Okay, that's helpful. And then maybe if I could just elaborate on that earlier, what you said the cost curve.

Now, I guess, are you seeing most of the additions at the upper end of the cost curve outside of yourselves? And what would you kind of say is kind of a good range to think of as the cost curve, maybe the upper end?

Should we just take kind of spodumene prices and use that and convert that into battery grade? Or how should we think about where the cost curve has moved to now?

Well, I think, well, we're thinking -- we think about it as a longer term to get to the volumes the market needs over time. So new capacity coming on.

And some of that is about the quality of the resource, where it is, the technology that you need, or even to develop in order to bring that to market. So we don't publish what our view of the cost curve.

So we're not, I'm not going to talk about those particular numbers. But I think from our view, it's moved up over the last several years.

And as the market requires more and more volume, it will continue to move up.

So good morning. How much could you flex the tolling side of the business?

And I know the margins significantly different from your segment average. And secondly, with as you look at the opportunities around recycling, is there any incentive to shift your center of gravity downstream into more of the processing chemical or ways to integrate your knowledge of the chemistry with the downstream processing and capture more margin that way.

So, first of all, Lawrence on the tolling, I would say, we're evaluating that now there's, as per the earlier question, there's capacity in the marketplace. And we will have spodumene coming from MRL, the MARBL joint venture and our partner with MRL that we can put into the market.

So it could flex upwards from the guidance that we have here that is possible. Our margins are slightly less, because you're paying several dollar a kilogram sort of see over what our normal costs would be.

But obviously, at current pricing, that's fairly immaterial in the scheme of things. And then your second question, Lawrence was around recycling going downstream.

I think we're looking at this now that we believe, if you look at what it takes to process black mass to various mineral components, and many of the unit operation, in fact we more than believe we know that many of the unit operations are very similar to what we do throughout our company and certainly in lithium. Many of the technologies are practiced in our existing operations to process mineral resources we do.

And so other than just that last step processing to battery grade lithium, we're evaluating just how we partner, invest and develop that supply chain, which will be a regional effort from region to region, because it's very regionalized business recycling is. And so we're in that and well, as we develop that strategy further.

We'll obviously share more details of that in future.

Okay, thank you, Nadia. And thank you all for participation on our call today.

The momentum we are experiencing in ‘22, combined with our pipeline of projects strongly positioned us to execute on profitable and sustainable growth for the longer term. I'm confident in our team's ability to drive value for all stakeholders by accelerating our growth in a sustainable way and to lead by example.

Thank you for joining us.