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【Lithium prices continue to plummet, lithium mining giant Albemarle plans layoffs and suspends expansion】

01:58PM

Original from ZHITONG Finance, shared by SMM-Florence HU. Release time: 2024-01-30 10:07:00

Albemarle, the world's largest lithium producer, announced on Wednesday that it will lay off employees and postpone spending on a refining plant project in the United States as part of its cost-cutting plan. The current decline in lithium metal prices, which are used in the manufacturing of electric vehicle batteries, is the reason behind this decision. The company's stock price fell over 4% on Wednesday to $120.70. Over the past 52 weeks, the company's market value has evaporated by nearly half. Oppenheimer analyst also lowered Albemarle's target price from $308 to $191 on Wednesday.

On January 18th, Albemarle, the world's largest lithium producer, announced that it will lay off employees and postpone spending on a refining plant project in the United States as part of its cost-cutting plan. The current decline in lithium metal prices, which are used in the manufacturing of electric vehicle batteries, is the reason behind this decision.

On January 17th, the company's stock price fell over 4% to $120.70. Over the past 52 weeks, the company's market value has evaporated by nearly half. Oppenheimer analyst also lowered Albemarle's target price from $308 to $191 on Wednesday.

Over the past year, the supply of lithium metal has exceeded the demand in the battery market, leading to oversupply and dragging down prices. Although lithium prices may vary by region and type, a price index tracked by Benchmark Mineral Intelligence has fallen by 81% in the past year, with a nearly 11% drop in the past month alone.
As a supplier to Tesla and other automakers, Albemarle sells most of its lithium products through long-term contracts tied to market pricing. The company stated in November last year that soft lithium prices would weaken sales in 2023, although executives described the market volatility as "road bumps" rather than any erosion of long-term expectations for strong demand.

Albemarle has announced that its planned capital expenditure for 2024 is expected to be between $1.6 billion and $1.8 billion, lower than the approximately $2.1 billion in 2023. The company also plans to postpone spending on a large lithium refining project in South Carolina, which aims to become one of the world's largest battery metal processing plants.

Albemarle has confirmed that it will complete the commissioning of several lithium refining plants in China and Australia, with construction nearing completion. The company also stated that it will prioritize the resumption of permitting work for a lithium mine in North Carolina.

It is currently unclear whether the budget cuts will affect Albemarle's plans to launch direct lithium extraction (DLE) technology in Arkansas, where competitors such as ExxonMobil and Lithium Technology are deploying this new filtration process.

Additionally, the company plans to implement layoffs, but has not specified how many employees will be affected. Albemarle expects these measures to save $95 million annually, with $50 million in savings projected for 2024.

The company stated that it will record expenses related to severance and related benefits, employee departures and disposals, as well as asset impairments in the first quarter.

On the same day, Albemarle also announced its intention to sell its stake in Liontown Resources in Australia. Last year, Australia's richest person, Gina Rinehart, prevented Albemarle from acquiring the lithium miner for $4.3 billion.

Albemarle plans to announce its fourth-quarter earnings and discuss the outlook for 2024 on February 15th.