Cecilia Jamasmie | January 29, 2024
Albemarle is testing direct lithium extraction (DLE) technologies in Chile.
(Image courtesy of Albemarle Chile.)
Albemarle (NYSE: ALB), the world’s largest lithium producer, is said to have laid off more than 300 employees, or 4% of its total workforce, across its US and global operations.
The move, reported by The Information, comes as an oversupply of the ultra-light metal used in electric-vehicle (EV) batteries has caused prices to collapse. Lithium has plunged more than 80% from a late-2022 record high, with experts predicting that lithium carbonate prices in top consumer and producer China could fall by more than 30% this year from December 2023 levels.
The price of lithium has tumbled to $13,200 per tonne, its lowest level since 2020, data from Benchmark Mineral Intelligence shows.
Goldman Sachs recently said it estimated a surplus of 200,000 tonnes of lithium carbonate equivalent, or 17% of global demand, this year. It anticipated the situation to push producers, particularly Australians, to “substantially” reduce output to balance the market.
The US-based lithium giant had announced earlier this month it was mulling how to maintain growth, cut costs and optimize cashflow in the face of current market headwinds.
At the time, it predicted layoffs and said it would defer spending on projects, including a massive refinery project in South Carolina.
According to Monday’s news report, Albemarle’s job cuts affected its legal, mergers and acquisitions, marketing, materials sciences, research and development and recycling teams.
Analysts at BMI Research, a unit of Fitch Solutions, said the miner’s decision was not surprising, as the majority of its investment focus is on major lithium expansions through conversion assets, which leaves it vulnerable to disruptions in the market.
Dominant revenue stream
BMI expects lithium to remain Albemarle’s main revenue stream. It also sees the company prioritizing low-cost lithium projects in the longer term, which will help it benefit from an uptick in lithium demand and elevated prices.
Albemarle (NYSE: ALB), the world’s largest lithium producer, is said to have laid off more than 300 employees, or 4% of its total workforce, across its US and global operations.
The move, reported by The Information, comes as an oversupply of the ultra-light metal used in electric-vehicle (EV) batteries has caused prices to collapse. Lithium has plunged more than 80% from a late-2022 record high, with experts predicting that lithium carbonate prices in top consumer and producer China could fall by more than 30% this year from December 2023 levels.
The price of lithium has tumbled to $13,200 per tonne, its lowest level since 2020, data from Benchmark Mineral Intelligence shows.
Goldman Sachs recently said it estimated a surplus of 200,000 tonnes of lithium carbonate equivalent, or 17% of global demand, this year. It anticipated the situation to push producers, particularly Australians, to “substantially” reduce output to balance the market.
The US-based lithium giant had announced earlier this month it was mulling how to maintain growth, cut costs and optimize cashflow in the face of current market headwinds.
At the time, it predicted layoffs and said it would defer spending on projects, including a massive refinery project in South Carolina.
According to Monday’s news report, Albemarle’s job cuts affected its legal, mergers and acquisitions, marketing, materials sciences, research and development and recycling teams.
Analysts at BMI Research, a unit of Fitch Solutions, said the miner’s decision was not surprising, as the majority of its investment focus is on major lithium expansions through conversion assets, which leaves it vulnerable to disruptions in the market.
Dominant revenue stream
BMI expects lithium to remain Albemarle’s main revenue stream. It also sees the company prioritizing low-cost lithium projects in the longer term, which will help it benefit from an uptick in lithium demand and elevated prices.
BMI Research expects prices to continue to be weighed down by poor supply-demand dynamics in the near term, which has the potential to dent Albemarle’s profit margins.
“The company has the ability to further reduce capital expenditure to maintain liquidity,” BMI said in a note. “Its strong financial position enables it to explore M&As and joint-venture formation in the longer term as one of its disciplined investment approaches to growth.”
BMI noted that accelerated EV production through 2030 and elevated lithium prices will support Albemarle’s revenue in the longer term.
Albemarle did not immediately respond to MINING.COM’s request for comment.
Shares in the company were up 0.7% to $120.51 on Monday morning, valuing the company at $14.1 billion.
No comments:
Post a Comment