Albemarle to axe jobs, halt growth, sell Liontown stake

Plunging lithium prices are forcing Albemarle (NYSE: ALB) to cut jobs and defer spending, including on a massive refinery project in South Carolina, as part of a wide-ranging plan to slash costs.

The world’s top producer of the battery metal said on Wednesday it would spend US$1.6 billion to US$1.8  billion this year, down from about $2.1 billion it invested in 2023. Albemarle expects the measures to save US$95 million annually, of which US$50 million will come this year. It didn’t say how many people would be laid off. 

“The actions we are taking allow us to advance near-term growth and preserve future opportunities as we navigate the dynamics of our key end-markets,” chief executive Kent Masters said in the statement. “The long-term fundamentals for our business are strong and we remain committed to operating in a safe and sustainable manner.”  

The North Carolina-based lithium producer noted it would finish the commissioning of several lithium refineries in China and Australia, which are almost fully built. The company also said it would focus on securing the necessary permits to reopen its Kings Mountain lithium mine in North Carolina.

The asset contains one of the few known hard rock lithium deposits in the United States. The operation would feed enough material for to produce 50,000 tonnes of lithium carbonate equivalent and support the manufacturing of about 1.2 million electric vehicles (EVs) a year initially, the company says. 

Lithium price

The battery metal’s supply over the past year outpaced demand, causing a price collapse. While lithium prices vary by region and type, most indexes including the one tracked by Fastmarkets and Benchmark Mineral Intelligence, have dropped by more than 80% in the past year. 

Experts expect prices for the lightweight material, key for making the batteries that power EVs and high-tech devices, to keep dropping.

Lithium carbonate fell by 1.05% on Wednesday on the Shangai Metals Market, closing at 103,800 yuan ($19,520) per tonne. That’s a nearly 11% price plunge over the past month alone.

Liontown stake

The lithium giant is also seeking to sell its stake in Australia’s Liontown Resources (ASX: LTR) after billionaire Gina Rinehart’s company Hancock Prospecting in October blocked Albemarle’s A$6.6 billion ($5.8 billion) takeover bid.

Albemarle has priced the roughly 96 million shares it holds in the Australian lithium developer at around A$121 million in a block trade run by JPMorgan, a term sheet showed on Wednesday.

The offer price of A$1.26 to A$1.32 per share is a discount to Liontown’s last traded price of A$1.36 on Wednesday. Shares had closed as high as A$3 in the days prior to Albemarle’s bid withdrawal.

Perth-based Liontown confirmed Albemarle’s intentions to local media. The company owns one of the most promising early-stage lithium projects in Australia’s Kathleen Valley, 680 km northeast of Perth in Western Australia’s premier mining district.

Kathleen Valley is considered one of the world’s largest and highest-grade hard rock lithium deposits with an estimated 156 million tonnes grading 1.4% lithium oxide and 130 parts per million tantalum oxide.

The project, on track to begin commercial production around June, is forecast to initially produce around 500,000 tonnes a year of spodumene concentrate before expanding to 700,000 tonnes annually in six years.

Liontown already has supply agreements with Tesla, Ford and South Korea-based LG Energy Solution.

Hancock Prospecting is now the lithium junior’s largest shareholder with a 19.9% stake. 

Rinehart owns shares in other lithium producers such as Patriot Battery Metals (TSX: PMT; ASX: PMT) and Delta Lithium (ASX: DLI), but the main focus of her investment is iron ore.