Albemarle Corporation has announced significant changes to its operations at the Kemerton lithium processing plant in Western Australia.
The company is halting the expansion of the facility and implementing cost-cutting measures in response to ongoing industry headwinds, particularly in the lithium market.
The Kemerton plant, which is Australia’s largest lithium hydroxide processing facility, will see its production capacity reduced from 50,000 tonnes to 25,000 tonnes annually.
Albemarle is stopping construction activities on the planned third processing train and idling production at the second train, placing it in care and maintenance.
The company will now focus its manufacturing efforts on the continued ramp-up and qualification of the first train.
These changes are expected to result in up to 300 job losses, reducing the workforce at Kemerton by approximately 40 per cent.
The decision comes as Albemarle reported a net loss of $188 million, or $1.96 per share, for the second quarter of 2024.
Kent Masters, Albemarle’s Chairman and CEO, explained the rationale behind these actions: “The long-term growth potential for our end markets remains strong, and we plan to leverage our core capabilities while ensuring we remain competitive. Given the dynamics of the global markets we serve, we must be able to pivot and pace as necessary to maintain our leading position.”
The company’s decision is largely attributed to persistently low lithium prices and a slowdown in electric vehicle market growth. Lithium prices have been on a downward trajectory since May, currently sitting below $12,000 per metric tonne.
These changes at Kemerton are part of a broader review of Albemarle’s cost and operating structure.
The company aims to preserve its world-class resource advantages, optimise its global conversion network, improve cost competitiveness and efficiency, reduce capital intensity, and enhance financial flexibility.
The Australian Manufacturing Workers Union expressed disappointment over the lack of consultation regarding these job cuts.
Federal Resources Minister Madeleine King extended her sympathies to the affected workers, noting that the decision was made at Albemarle’s headquarters in North Carolina.
Despite these challenges, Albemarle remains Australia’s largest producer and manufacturer of lithium.
The company continues to see long-term potential in the lithium market, driven by the growing demand for electric vehicles and renewable energy storage.
Albemarle plans to provide more details on its comprehensive review during its third-quarter earnings call.
As the lithium industry navigates these market challenges, the developments at Kemerton underscore the volatile nature of the sector and the need for companies to adapt quickly to changing market conditions.
