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Lithium giant’s lament over labour shortages, cost blow outs in WA

Brad ThompsonReporter
Aug 6, 2021 – 9.55am
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Battery chemicals multinational Albemarle Corporation has warned of more delays and cost blow outs on a lithium hydroxide plant under construction in Western Australia as a result of the “extreme” labour market in the state.
The company’s chief executive Kent Masters told international analysts and investors that WA was “kind of famous for a labour market that gets difficult if you’re doing large projects”.
He also warned lockdown policies that didn’t apply in other international jurisdictions would affect anyone doing a big project in Australia and in particular in WA.
Albemarle said it was grappling with both international and intrastate COVID-related border restrictions in WA, and had altered its construction plans to mitigate risk.
The lithium hydroxide plant is already almost a year behind schedule and will cost Albemarle much more than the original $US1.2 billion ($1.62 billion) price tag.
Mr Masters also gave no signal the company was about to re-start the Wodgina lithium mine in WA despite in a strong rebound in prices.
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New Stock Exchange-listed Albemarle’s share price hit record highs after it announced better than expected June quarter earning overnight, and on the back of US president Joe Biden declaring electric models should make up 50 per cent all new car sales by 2030.
“if you’re building in WA, the availability of labour, the tightness is extreme.”
— Kent Masters, Albemarle Corp CEO
Albemarle said it had opted to change plans for the Kemerton lithium hydroxide plant in WA because of the risk posed by skills shortages.
It will focus on completing the first 25,000-tonne-a-year train and delay by work on train 2 by three months.
“These delays and higher labour rates have also increased capital cost,” Mr Masters told analysts.
“It’s been a difficult situation and a labour market that was already tight, but we have been able to maintain the schedule for Kemerton I with only a three month delay for Kemerton II.
“We continue to expect commercial production for both Kemerton I and II during 2022.”
Asked if the entire battery metals industry in WA was facing significant delays and in danger of not being able to meet demand from car makers, Mr Masters said: “I can’t speak for other projects, but I mean, if you’re building in WA, the availability of labour, the tightness is extreme.”
Albemarle has been able to complete construction work on its La Negra lithium carbonate project in Chile and is targeting China for its next wave of investment.
“WA is kind of famous for a labour market that gets difficult if you’re doing large projects, just because the resource industry draws all of the resources,” Mr Masters said.
The Albemarle boss said the issue was well known but had come to a head with soaring prices for iron ore and other commodities, and the response to the COVID-19 pandemic in Australia.
“Today we have COVID, so they lockdown not only Australia, but state-by-state,” he said.
“So we can’t move - not only can we not get resources from China or Thailand or even the UK, we can’t get resources from the east part of Australia.
“So we’re kind of stuck with what’s in WA. So, and I think that will affect anyone doing a big capital project in WA or Australia. I’m not sure that it applies say in China, for example.”
Mr Masters flagged that the Wodgina mine might not re-start until Albemarle acquires downstream processing capacity in China.
Wodgina, close to WA’s iron ore epicentre Port Hedland, has sat idle since November 2019 when it was put into care and maintenance on the same day Albemarle finalised a deal to hand Chris Ellison-led Mineral Resources $US1.3 billion for a 60 per cent stake.
Under the deal, Mineral Resources ended up with a 40 per cent stake in the mine and in Kemerton stage 1 and 2.
The are reports of what appears to be more activity and workers on-site at Wodgina in recent weeks as resurgent near-neighbour Pilbara Minerals captures remarkable prices for spodumene.
Mr Masters said Albemarle intended to feed Kemerton from the Greenbushes lithium mine. which it owns through a joint venture known as Talison with China’s Tianqi, for the foreseeable future.
Both Albemarle and Tianqi are expected to want to boost production at Greenbushes with Tianqi, and its partner IGO, about to start producing lithium hydroxide from a plant at Kwinana south of Perth.
“Our plans are to feed Kemerton from Talison. And then, as we either bring on other capacity or do an acquisition, we would use Wodgina for that,” Mr Masters said.
“And our strategy about selling spodumene hasn’t changed.”
Wodgina is almost 1800 kilometres from Kemerton, in WA’s south west, by road.