In the past couple of weeks, the outlook for the Australian lithium industry had been looking a little more confident. Major local players like Pilbara Minerals, IGO, and Mineral Resources produced output and sales figures for the June quarter and for 2023-24 that showed a steadying of the slump. There were some signs of price gains as well—small as they were. And this week, the embattled Liontown produced its first spodumene from its Kathleen Valley mine in WA.
But on the last day of July, Albemarle, the world’s biggest lithium miner, blew up that calm by pulling the plug on its Australian refineries as it looks for even deeper cost cuts.
The end result of the cuts will be a plant producing a quarter of the planned 100,000 tonnes of lithium hydroxide and a 40% cut in staff.
Albemarle said it will halt the expansion of its big plant near the Greenbushes mine in the Southwest of WA, as it reviews costs due to headwinds from weak lithium prices. The company said the expansion work at the Kemerton plant will end (it produces battery-grade lithium hydroxide for electric vehicles and other products) and it will also idle a lithium processing line at the plant and focus production on a single line.
The workforce at Kemerton will be reduced by 40%. The plant’s production capacity will fall to 25,000 tons from 50,000 tons currently as the line is idled, CEO Kent Masters said. Albemarle had originally planned to expand Kemerton to four processing lines with a capacity of 100,000 tons. The company is halting construction on the third line, after canceling plans for the fourth line.
The dramatic decision came after the company reported a second-quarter net loss of $US188 million, compared with a profit of $US650 million in the same quarter of 2023. The company took a $US215 million after-tax charge due to capital project asset write-offs related primarily to the canceled fourth processing line at Kemerton. Revenue fell 39% to $US1.4 billion from $US2.37 billion in the same period a year ago.
Despite the dramatic move, Albemarle said it still expects capital expenditures to come in at the high end of its $US1.7 billion to $US1.8 billion guidance for 2024.