Hot Topics

Albemarle reassesses global investment strategy, exits Liontown amid falling lithium prices

Go to Colin Hay author's page
By Colin Hay - 
Albemarle Kemerton exits Liontown Resources falling lithium prices

Leading international lithium firm Albemarle, which was prominent in an Australian project bidding frenzy in late 2023, has had to dramatically rethink its global investment plans.

With lithium prices continuing to tumble, the US-headquartered firm said it is now taking “proactive measures to re-phase growth investments” and optimise cost structure to generate long-term financial flexibility and unlock around $1.1 billion in cash flow over the near term.

Albemarle says it now expects its 2024 capital expenditures to be in the range of $2.4b to $2.7b, down from approximately $3.1b in 2023.

Chief executive officer Kent Masters said the spending cuts will see a re-phasing of larger projects in the near term to focus on those that are significantly progressed, near completion and in start-up.

At Kemerton, Albemarle will complete commissioning activities for Trains 1 and 2 at the lithium conversion facility and focus on the construction of Train 3.

No clarity was given on the direction the company is taking with Train 4, which has also been under construction.

Albemarle has invested around $2b to build the world-leading Kemerton lithium hydroxide processing plant near Bunbury in Western Australia.

Staff and costs cut

The company also revealed it is pursuing actions to optimise its cost structure, including cutting workforce numbers.

Details regarding where those cuts are coming from and the exact numbers to be removed were not provided.

Albemarle said it will be reducing overall annual costs by approximately $145 million, primarily related to sales, general and administrative expenses including a reduction in headcount and lower spending on contracted services.

These are expected to provide more than $75m in cost savings in 2024.

“The actions we are taking allow us to advance near-term growth and preserve future opportunities as we navigate the dynamics of our key end-markets,” Mr Masters said.

“The long-term fundamentals for our business are strong and we remain committed to operating in a safe and sustainable manner.”

“As a market leader, Albemarle has access to world-class resources and industry-leading technology, along with a suite of organic projects to capture growth.”

Liontown sale

It has been reported that Albemarle has raised around $120m after it sold off its interest in Australian lithium miner Liontown Resources (ASX: LTR).

The move comes after it failed to fully acquire Liontown and its world-class Kathleen Valley lithium project late last year.

The company’s 4% holding in Liontown was traded at prices of between $1.26 and $1.32 per share, representing a discount to their previous close of between 2.9% and 7.4% .

In late October, Albemarle announced it would not pursue a binding agreement to purchase Liontown and that it had formally withdrawn its non-binding offer.

The company, which had featured in a bidding war with Australia’s Gina Rinehart, noted growing complexities associated with the proposed transaction as a factor in its decision.

Albemarle is one of Australia’s biggest lithium investors, with mining assets at Wodgina and Greenbushes, as well as the Kemerton lithium hydroxide plant currently undergoing a significant expansion.