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FMC Corp (FMC) Revises Operating Agreements in Argentina


FMC Corporation FMC has revised its operating agreements in Argentina. The move will enable the company to expand production and complete a major step toward the intended separation of its lithium business this year.

The amended operating agreements update FMC Corp’s corporate social responsibility programs and royalties in Argentina and remove restrictions that could prevent a change of control over its lithium business. Notably, the revised royalties and CSR programs are consistent with the current commitments.

FMC Corp expects to double its production in Argentina over the next several years with total annual output to be more than 40,000 metric tons of lithium carbonate equivalents.

Notably, FMC Corp’s debottlenecking projects in Argentina contributed to its third-quarter results. The completed project has a deferred run rate of 2,000 tons per annum of carbonate and will be at the full run rate of 4,000 ton by the end of 2018.

During third-quarter earnings call, FMC Corp stated that it will continue to move ahead with the expansion in Argentina where it aims to add at least 20,000 tons of lithium carbonate capacity with an initial investment between $250 and $300 million. The engineering work is under progress and discussions are on with the local authorities to finalize these plans. The company will provide an update on plans to separate its lithium business and expand its Argentina operations during its fourth-quarter 2017 earnings call.

Shares of FMC Corp have gained 6.9% in the last three months, outperforming the industry’s 5.6% growth.

In November last year, FMC Corp had raised its earnings outlook for 2017 and now sees adjusted earnings in the range of $2.59-$2.69 per share for the year (up from the prior view of $2.30-$2.50), which includes the impact of two months contribution from the DuPont Crop Protection acquisition.

FMC Corp is gaining from its strategic investments, acquisitions and efforts to expand its market position and strengthen its portfolio. Upbeat prospects for the company’s Lithium unit have also provided a boost to its shares.

The company is expanding its lithium hydroxide production capacity in three phases. The move is based on the growing demand for electric vehicles.

FMC Corporation Price and Consensus

FMC Corporation Price and Consensus | FMC Corporation Quote

Zacks Rank & Stocks to Consider

FMC Corp currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Huntsman Corporation HUN, Daqo New Energy Corp. DQ and Kronos Worldwide Inc. KRO, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Huntsman has an expected long-term earnings growth rate of 8%. Its shares have soared 78.8% over a year.

Daqo New Energy has an expected long-term earnings growth rate of 7%. Its shares have rallied a whopping 205.3% over a year.

Kronos Worldwide has an expected long-term earnings growth rate of 5%. Its shares have surged 99.5% in the last year.

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