Investments

3 Months Ended

Mar. 31, 2023

Equity Method Investments and Joint Ventures [Abstract]

Investments

Investments:

MARBL Joint Venture Agreement Restructuring

On February 22, 2023, the Company announced that it has signed definitive agreements with Mineral Resources Limited (“MRL”) to restructure the parties' MARBL lithium joint venture in Australia (“MARBL”) and separately for MRL to invest in Albemarle conversion assets in China. This restructured agreement is intended to provide the Company with additional funding to support the expansion of lithium conversion capacity, while securing downstream conversion capacity for MRL.

In Australia, Albemarle will increase its interest in the first two conversion trains of the Kemerton processing plant from 60% to 85% by purchasing a 25% interest from MRL. Albemarle will operate Kemerton trains 1 and 2 on behalf of the joint venture. MRL will increase its interest in the Wodgina Lithium Mine Project from 40% to 50% by purchasing a 10% interest from Albemarle. MRL will operate the Wodgina mine on behalf of the joint venture. Consideration for Albemarle's increased stake in Kemerton will be offset by consideration for MRL's increased stake in Wodgina.

In China, MRL will acquire a 50% interest in Albemarle's Qinzhou and Meishan plants. Qinzhou has a designed annual capacity of up to 25,000 metric tonnes of LCE. The plant will undergo modifications to be able to convert Wodgina spodumene and is expected to commence that conversion in early 2024. The Meishan plant, which is under construction with a designed annual capacity of 50,000 metric tonnes of LCE, is scheduled to be completed in 2024. Albemarle will continue to operate Meishan and Qinzhou.

In addition, MRL committed to fund 50% of the capital costs for downstream conversion capacity. MRL is expected to pay approximately $350 million for its initial share of capital costs of this conversion capacity at closing. Albemarle expects to pay MRL a completion adjustment currently estimated to be between $100 million to $150 million reflecting a retroactive effective date of April 1, 2022.

These transactions are expected to close in stages beginning in the second quarter of 2023 and are subject to regulatory approval and other customary closing conditions. At this time the Company expects to record a gain as a result of these transactions in the period it closes.

Variable Interest Entities

The Company holds a 49% equity interest in Windfield Holdings Pty. Ltd. (“Talison”), where the ownership parties share risks and benefits disproportionate to their voting interests. As a result, the Company considers Talison to be a variable interest entity (“VIE”), however this investment is not consolidated as the Company is not the primary beneficiary. The carrying amount of the Company’s 49% equity interest in Windfield, which is our most significant VIE, was $746.8 million and $694.5 million at March 31, 2023 and December 31, 2022, respectively. The Company’s aggregate net investment in all other entities which it considers to be VIEs of which the Company is not the primary beneficiary was $7.7 million at March 31, 2023 and $6.7 million at December 31, 2022. The Company’s unconsolidated VIEs are reported in Investments on the consolidated balance sheets. The Company does not guarantee debt for, or have other financial support obligations to, these entities, and its maximum exposure to loss in connection with its continuing involvement with these entities is limited to the carrying value of the investments.

The following table summarizes the unaudited results of operations for the Talison joint venture, which met the significant subsidiary test for subsidiaries not consolidated or 50% or less owned persons under Rule 10-01 of Regulation S-X, for the three-month periods ended March 31, 2023 and 2022 (in thousands):

	Three Months Ended March 31,
	2023		2022
Net sales	$	1,959,298	$	392,833
Gross profit	1,901,700		354,442
Income before income taxes	1,784,150		292,552
Net income	1,248,902		204,787

Other

As part of the proceeds from the sale of the fine chemistry services (“FCS”) business on June 1, 2021, W.R. Grace & Co. (“Grace”) issued Albemarle preferred equity of a Grace subsidiary having an aggregate stated value of $270 million. The

preferred equity can be redeemed at Grace’s option under certain conditions and will accrue PIK dividends at an annual rate of 12% beginning two years after issuance. This preferred equity had a fair value of $266.3 million and $260.1 million at March 31, 2023 and December 31, 2022, respectively, which is reported in Investments in the consolidated balance sheets.