Albemarle (NYSE: ALB) announced a strategic plan on Wednesday to trim expenses as the world faces a surplus in the global supply of lithium. The move includes job cuts, a reduction in capital spending, and a postponement of a major lithium refining project in the United States, all aimed at addressing the impact of falling prices of the essential metal used in electric vehicle (EV) batteries.
As part of its cost-cutting strategy, Albemarle is targeting a capital spending range of $1.6 to $1.8 billion for 2024, down from approximately $2.1 billion in 2023. Additionally, the company is deferring investment in a colossal lithium refining project situated in South Carolina, initially designed to be one of the world’s largest processors of the battery metal.
While implementing these measures, Albemarle emphasized its commitment to completing the commissioning of lithium refineries in China and Australia, both of which are near completion. The company also outlined plans to prioritize permitting efforts for the reopening of a lithium mine in North Carolina.
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The oversupply of lithium in the market over the past year has led to a significant drop in prices, particularly affecting the battery sector. Benchmark Mineral Intelligence reported an 81% decline in its price index over the past year and an additional 11% drop in the last month.
The restructuring plan includes workforce reductions, although specific details regarding the number of affected employees were not disclosed by Albemarle. The overall impact of these initiatives is anticipated to yield annual savings of $95 million, with $50 million expected in 2024, according to the company.
Acknowledging the financial implications of the restructuring, Albemarle disclosed that it would record charges in the first quarter related to severance and benefit costs, exit activities, and asset write-downs.
In a parallel development on Wednesday, Albemarle revealed its decision to divest its stake in Australia’s Liontown Resources. This decision follows the blockage of Albemarle’s $4.3 billion bid for the lithium developer by Australia’s wealthiest individual, Gina Rinehart, last year.
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