Albemarle lays off 300 employees amid lithium price slump

Albemarle (NYSE: ALB), the world’s largest lithium producer, is said to have laid off more than 300 employees, or 4% of its total workforce, across its U.S. and global operations.

The move, reported by The Information, comes as an oversupply of the ultra-light metal used in electric vehicle batteries has caused prices to collapse. Lithium has plunged more than 80% from a late-2022 record high, with experts predicting that lithium carbonate prices in top consumer and producer China could fall by more than 30% this year from December 2023 levels.

Goldman Sachs recently said it estimated a surplus of 200,000 tonnes of lithium carbonate equivalent, or 17% of global demand, this year. It anticipated the situation to push producers, particularly Australians, to “substantially” reduce output to balance the market.

The U.S.-based lithium giant had announced earlier this month it was mulling how to maintain growth, cut costs and optimize cashflow in the face of current market headwinds. 

At the time, it predicted layoffs and said it would defer spending on projects, including a massive refinery project in South Carolina.

According to Monday’s news report, Albemarle’s job cuts affected its legal, mergers and acquisitions, marketing, materials sciences, research and development and recycling teams.

Analysts at BMI Research, a unit of Fitch Solutions, said the miner’s decision was not surprising, as the majority of its investment focus is on major lithium expansions through conversion assets, which leaves it vulnerable to disruptions in the market. 

Dominant revenue stream 

BMI expects lithium to remain Albemarle’s main revenue stream. It also sees the company prioritizing low-cost lithium projects in the longer term, which will help it benefit from an uptick in lithium demand and elevated prices.

The price of the energy metal has tumbled more than 80% in the past year to $13,200 per tonne, its lowest level since 2020, data from Benchmark Mineral Intelligence shows.

BMI Research expects prices to continue to be weighed down by poor supply-demand dynamics in the near term, which has the potential to dent Albemarle’s profit margins. 

“The company has the ability to further reduce capital expenditure to maintain liquidity,” they say in a note. “Its strong financial position enables it to explore M&As and joint-venture formation in the longer term as one of its disciplined investment approaches to growth.” 

BMI noted that accelerated electric vehicle production through 2030 and elevated lithium prices will support Albemarle’s revenue in the longer term.

Albemarle did not immediately respond to a request for comment.

Company shares were up 0.7% to US$120.51 ($162.06) on Monday morning, valuing the company at US$14.1 billion. Its shares traded between US$112 and US$293.01 over the last year.