Albemarle To Cut 300 Jobs, Slash Lithium Output Amid Falling Commodity Prices

U.S.-based lithium giant Albemarle will lay off up to 300 staff after announcing a significant reduction in its construction plans due to falling commodity prices.

Albemarle's Kemerton plant will decrease its staff by 40% and cut its output capacity of lithium hydroxide by half by stopping the expansion of its third production train and putting the second train into care and maintenance, ABC reported.

All the trains at Kemerton had the capacity to produce 25,000 tonnes of lithium hydroxide annually.

The move will jeopardize Albemarle's operations in Western Australia's South West region, which included its ambition to raise the production to more than 100,000 tonnes per year.

The sudden downturn in lithium prices and rising operational costs have forced Albemarle to focus on cost reduction and efficiency.

Lithium expert Romana Sala Tenna said that the price of spodumene, a raw material needed to make lithium hydroxide, has dropped considerably more than expected.

"Downstream processing in WA was always going to be a challenge," he said. "It is a high-cost environment and a high [capital expenditure] environment to produce lithium hydroxide.

Meanwhile, the Australian Manufacturing Workers Union and local politicians criticized the move, citing the impact on the local workforce and the lack of notice as the main points of contention.

"Albemarle turned up in the South West in 2020 promising they would provide secure, well-paid jobs of the future for manufacturing workers," WA secretary Steve McCartney said. "All they've done in that time is either put workers' lives at risk or sack people at the drop of a hat.

Apart from the Kemerton plant, Albemarle owns 49% in a joint venture with Talison at Greenbushes, Australia's largest lithium mine.

"The long-term growth potential for our end markets remains strong, and we plan to leverage our core capabilities while ensuring we remain competitive," chairman and chief executive Kent Masters said.

"Building on the progress already underway, we are announcing a comprehensive review of our cost and operating structure, beginning with immediate footprint actions at our Kemerton site in Australia."

After a difficult financial quarter in which it declared a net loss of US$188 million for Q2, Albemarle saw a steep decline in operations. In the same period last year, the company posted a profit of US$650 million.

The write-off of assets from the abandoned fourth processing line at the Kemerton plant was primarily responsible for the company taking a hit of US$215 million after-tax charge. Revenue also dropped significantly as well, by 39% to US$1.4 billion.