Lithium Price Crash Forces Albemarle to Cut Production and Jobs in Western Australia
US mining company Albemarle has announced a significant reduction in production and workforce at its $2 billion lithium hydroxide plant in south-west Western Australia, due to a sharp decline in lithium prices. The company will halt expansion plans, cut 300 jobs, and write down the plant's asset value by approximately $1.5 billion.
The decision involves closing one of the two operational processing trains at the Kemerton facility near Bunbury and pausing construction on a third train. This development adds to the challenges faced by the mineral processing sector in Western Australia.
Albemarle, the world's largest lithium producer, has seen the price of lithium carbonate equivalent fall dramatically, from about $20 per kilogram in the second half of 2023 to between $12 and $15 per kilogram. An Albemarle Australia spokesman attributed the decision to market conditions and anticipated prolonged lower prices, stating that it was not influenced by state or federal government policies.
The $11 billion company is also conducting a review of its global costs and operating structure in response to persistent industry challenges. This move follows similar actions by other major players in the region. In July, BHP announced a three-year closure of its Western Australia nickel operation, affecting 3,000 positions, although frontline workers have been offered alternative employment within BHP. Additionally, Alcoa closed its aging alumina refinery in Kwinana earlier this year, resulting in 750 job losses.
Perth-based engineering firm Monadelphous disclosed that Albemarle terminated its contracts at Kemerton, leading to a projected revenue loss of $80 million for this financial year. Despite these setbacks, Albemarle’s chief, Kent Masters, expressed confidence in the long-term growth potential of the lithium market and stated that the company would begin exploring for new lithium deposits in Western Australia while maintaining about 460 workers at the Kemerton site.
Federal Resources Minister Madeleine King highlighted the challenges in the international critical minerals market, citing market concentration and volatile demand as factors in the 80% drop in lithium hydroxide prices over the past year. Speaking on ABC radio in Perth, King noted that Albemarle had previously planned to invest an additional billion dollars in expanding the Kemerton facility, including the construction of a fourth train. However, she acknowledged that market realities have changed.
Minister King also mentioned that the federal government is considering accelerating a production tax credit for critical minerals, initially announced in the May budget but not expected to be implemented until 2027. She stated that there is no indication that other companies are experiencing similar difficulties as Albemarle.
Western Australia's other two lithium hydroxide refineries are located in Kwinana: one is owned by Wesfarmers and Chile’s SQM, while the other is a joint venture between China’s Tianqi and WA miner IGO.
