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Elon Musk's plan to put batteries into millions of homes and cars is pushing two of the leading lithium producers to consider new factories to meet an expected surge in demand.

Albemarle Corp. is considering a new plant to make lithium hydroxide, the form of the metal used in electric vehicle batteries, Chief Executive Officer Luke Kissam said. FMC Corp. will decide within a year whether to build a new hydroxide plant, said CEO Pierre Brondeau. Both expect their projects will be built in Asia or the U.S.

Musk, the founder and chief executive officer of Tesla Motors Inc., expects to open next year a so-called gigafactory outside Reno, Nevada, to make batteries that power cars and store renewable energy for homes and businesses. Musk has called demand for stationary batteries "staggering" as states led by California seek ways to integrate solar and wind power into the electric grid.

"I expect over time we should get 50 percent of the growth in lithium derivatives," Kissam said in an interview at the American Chemistry Council's annual meeting in Colorado Springs, Colorado.

FMC, which controls half the world's lithium hydroxide output, and Albemarle, the biggest lithium products producer, are vying for market share in the expanding sector. Philadelphia-based FMC will decide by mid-2016 whether to add capacity in the U.S. or Asia to meet demand from companies such as Tesla, Brondeau said.

Albemarle, based in Baton Rouge, Louisiana, is designing a plant to convert spodumene directly into lithium hydroxide. The idea is to skip a step in order to make the company the lowest- cost producer, Kissam said. Spodumene is typically made into lithium chloride and then converted to hydroxide.

Musk reassured investors last month that Tesla will meet its projected 55,000 car deliveries this year and that its Model X sport utility vehicle will start reaching customers in the third quarter. In addition, Tesla has 38,000 orders from around the world for Powerwall, its home energy product, and 2,500 for the industrial-sized Powerpack. Tesla announced several partnerships with companies like Edison International's Southern California Edison and Amazon.com Inc.

Should Tesla help boost demand for lithium hydroxide, FMC will need to expand production capacity by 2017, Brondeau said.

Albemarle also plans to begin production later this year at a new plant in Chile that can make 20,000 tons a year of battery-grade lithium chloride from brine, although production won't fully ramp up until early 2017, Kissam said. The chloride product can be processed into hydroxide, or used in stationary batteries.

Albemarle and Sociedad Quimica & Minera de Chile SA, or SQM, are the lowest cost producers of lithium carbonate, he said.

Lithium is Albemarle's most profitable business, with earnings before interest, taxes, depreciation and amortization approaching 40 percent of sales, Kissam said. Albemarle acquired the business with its $6.2 billion purchase of Rockwood Holdings Inc. in a deal that closed in January.

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