Albemarle slashes 300 Australian jobs, shrinks giant lithium facility

Albemarle, the world’s largest lithium producer, will shut half of its giant West Australian lithium processing facility, and stop construction to expand it, due to a sustained slump in the price of the key battery metal.

The New York-listed lithium giant will slash 300 jobs as part of its aggressive move to immediately stop constructing the third production unit at the Kemerton facility, south of Perth, and place the second unit into care and maintenance.

Albemarle, Australia’s largest lithium producer and manufacturer, said it would instead focus on ramping up unit 1 within the lithium hydroxide processing facility, which up to this point has failed to reach nameplate capacity.

Albemarle CEO Kent Masters visits the Kemerton lithium hydroxide plant in 2022. Tony McDonough

The aggressive cut to the workforce and processing facilities was triggered by the collapse in price of the metal used to make electric vehicle batteries which dragged the US company into a second-quarter loss.

The price of spodumene has dived 88 per cent from the record highs above $US8000 a tonne reached in 2022.

The collapse of the lithium price, as well as the nickel price due to oversupply from Indonesia, has slashed jobs across WA. About 7000 jobs have been lost in the nickel industry in the state since last year.

Albemarle’s move comes just months after the federal government unveiled in the May budget a critical minerals production tax incentive, valued at $17.6 billion over 14 years, to entice companies to set up processing facilities in Australia.

‘Nothing to do with policies’

A spokesman for Albemarle in Australia insisted the US giant’s decision was due to market conditions and the commercial reality that lithium prices will stay lower for longer.

“This has nothing to do with state and federal government policies,” the spokesman said. Unit 1 would benefit from the critical minerals production tax incentive when it came into effect, he added.

“It will also assist the company’s decision-making later in the decade when, subject to sustained price improvement, we look to resume operations at Train 2.”

Federal Resources Minister Madeline King said Albemarle’s decision underscored the need to provide significant support for the critical minerals sector, and again called on federal Opposition Leader Peter Dutton to support the critical minerals production tax incentive.

“This is a complex problem and it is impacting international markets across the critical minerals sector globally,” Ms King said.

“Current conditions in lithium markets highlight the importance of policy support for Australia’s critical minerals sector to help address distortions in global markets.”

Albemarle, which owns a 49 per cent interest in the Greenbushes lithium mine and holds a stake in the Wodgina mine, will continue to employ about 460 people at the Kemerton plant, and about 40 employees will stay in the Perth office, The Australian Financial Review understands.

Australian Bureau of Statistics figures show the number of people employed in the WA resources sector has fallen 18 per cent over the past year to 144,900. The plunge in jobs follows several years of growth and has been cushioned by gold prices hovering at record highs.

Albemarle said it would begin an exploration program later this year in Australia. In June last year, Albemarle acquired Western Lithium, which holds various exploration tenements in the Pilbara, Goldfields and South West region, including near Greenbushes.

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

“Given the dynamics of the global markets we serve, we must be able to pivot and pace as necessary to maintain our leading position.”