Albemarle CEO Warns Pivoting Away from China for Lithium Supply Chains May Be Unfeasible
Kent Masters, CEO of Albemarle, the world’s largest lithium producer, has expressed concerns about shifting critical mineral supply chains away from China in North America and Europe, calling it economically impractical under current market conditions. "We were trying to pivot to the West… the prices we see in the market don’t really allow us to do that," Masters said in an interview with the Financial Times, warning that the U.S. could lose its competitive edge in the lithium market.
Lithium prices have plunged over 80% since early 2023, impacted by lower-than-expected electric vehicle (EV) uptake and broader economic challenges. This sharp decline has undermined Western efforts to establish domestic lithium supply chains, while China retains its dominance, controlling 65% of global refining capacity—a share expected to hold through 2040.
Albemarle recently reported a difficult third quarter, with low lithium prices, oversupply, and high operational costs leading to a net loss of US$1.1 billion, compared to a net income of US$300 million in the same period last year. The company has responded by making significant cutbacks, including pausing plans for a US$1.3 billion refinery in South Carolina and scaling back its expansion at the Kemerton plant in Western Australia. Albemarle also reduced its global workforce by 6–7%, and expects capital expenditures in 2025 to be between US$800 million and US$900 million—roughly half of this year’s spending.
These changes had immediate impacts on the workforce. Workers at the Kemerton plant, initially hired to construct new production trains, were reportedly turned away without prior notice. Union representatives criticized the layoffs, highlighting the difficulties faced by those who relocated for employment in South West WA’s lithium industry.
The challenges faced by Albemarle reflect broader struggles across the lithium industry. Piedmont Lithium canceled its US$800 million refinery project in Tennessee, and International Battery Metals suspended operations at a Utah plant just two months after starting production. According to Romano Sala Tenna, Portfolio Manager at Katana Asset Management, high wages, regulatory hurdles, and technological limitations are making it difficult for global players to maintain operations in Australia.
Despite this bleak outlook, there are still signs of growth. Rio Tinto recently acquired Arcadium Lithium for US$6.7 billion, marking the largest lithium acquisition to date. The global supply of lithium is projected to grow by 24% this year and 21% next year, although analysts predict prices are unlikely to recover until 2027.
The uncertainty around incoming U.S. President Donald Trump’s policy changes, including his promise to "end the insane electric vehicle mandate" and revise the Inflation Reduction Act (IRA), could further weaken EV adoption and exacerbate price pressures in the lithium market.
