Albemarle Announces Cost Cuts Amid Low Lithium Prices

US-based lithium producer Albemarle Corporation has announced the launch of cost-saving measures as well as halting some operations at one of its processing sites in Australia, as low prices for lithium persist. The company has decided to take action to preserve Albemarle's resources as well as to try to optimize its global network of mines and processing facilities, improve competitiveness, and reduce capital intensity, it said in its second-quarter results today.

It will initially adjust operations at its Kemerton lithium hydroxide processing plant in Australia, stopping activities at train 3 while idling production at train 2 but continuing production at train 1. The company expects to give more details on this operational review in its results for the third quarter.

"These actions showcase our deeper focus on cost and operating discipline," said Albemarle chief executive Kent Masters. "There is no question the global energy transition is underway. However, the pace of industry changes is dynamic."

The company said it expects lithium prices to average around $15/kg LCE for the whole of 2024, despite prices being much lower at present.

The company said EV demand growth in the US and Europe had moderated "substantially," and changes to the product mix of its downstream customers also weighed on demand for lithium. Masters said larger-than-consumer uptake of plug-in hybrid EVs (PHEVs) over pure battery EVs (BEVs) had a negative impact on lithium demand, due to the smaller batteries. Oversupply in China also contributed to falling prices.

"At current Chinese spot pricing, we believe and are hearing from the market that many non-integrated producers are unprofitable," said Kent. "Current pricing is well below the incentive pricing required for Western greenfield lithium projects."

He added geopolitical developments and the decision by the US Department of Energy to consider mines owned in part by China as foreign entities of concern will impact its Australian business. Albemarle co-owns the world's largest lithium mine, Greenbushes, with Tianqi lithium, a Chinese producer.

"We continue to anticipate 2.5 times lithium demand growth from 2024 to 2030. Additionally, we see battery size growing over time, driven by technology developments and EV adoption," said Kent.