Investments

6 Months Ended

Jun. 30, 2023

Equity Method Investments and Joint Ventures [Abstract]

Investments

Investments:

MARBL Joint Venture Agreement Restructuring

On July 19, 2023, the Company announced it agreed to amend the terms of definitive agreements signed with Mineral Resources Limited (“MRL”) in February 2023 to restructure the parties' MARBL lithium joint venture in Australia (“MARBL”). This amended agreement is intended to significantly simplify the commercial operation agreements previously entered into, retain full control of downstream conversion assets and to provide greater strategic opportunities for each company based on their global operations and the evolving lithium market.

Under the new agreements, Albemarle will acquire the remaining 40% ownership of the Kemerton lithium hydroxide processing facility in Australia currently jointly owned with Mineral Resources through the MARBL joint venture. Albemarle will also retain full ownership of its Qinzhou and Meishan lithium processing facilities in China, which were previously going to be owned 50% by MRL under the terms of the previously announced agreement restructuring. In exchange for the remaining ownership interest in Kemerton, Albemarle will pay cash and sell 10% of its interest in the Wodgina Lithium Mine Project (“Wodgina”) to MRL. Albemarle expects to pay MRL between an estimated $380 million to $400 million, depending on the closing date of the transaction, which includes net consideration for the remaining ownership of Kemerton as well as an economic effective date of the transaction retroactive to April 1, 2022. After closing, Albemarle and MRL will each own 50% of Wodgina, and MRL will operate the Wodgina mine on behalf of the joint venture.

This transaction is expected to close in the second half of 2023 and is subject to regulatory approval and other customary closing conditions.

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 $945.5 million and $694.5 million at June 30, 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 $6.8 million at June 30, 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 June 30, 2023 and 2022 (in thousands):

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Net sales	$	2,319,020	$	626,692	$	4,278,318	$	1,019,525
Gross profit	2,244,236		567,660		4,145,936		922,102
Income before income taxes	2,151,879		453,370		3,936,029		745,922
Net income	1,506,326		317,363		2,755,228		522,150

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 began accruing PIK dividends at an annual rate of 12% beginning on June 1, 2023. In addition, the preferred equity can be redeemed by Albemarle when the accumulated balance reaches 200% of the original value. This preferred equity had a fair value of $272.7 million and $260.1 million at June 30, 2023 and December 31, 2022, respectively, which is reported in Investments in the consolidated balance sheets.