Albemarle Adjusts To Lower-For-Longer Lithium Prices, Cuts Capex, Announces Layoffs

Albemarle Corporation ALB, the world's leading lithium producer, reported a challenging third quarter, revealing a net loss of $1.1b amidst a continued downturn in lithium prices.

Despite a market slump, fueled by a supply surplus from China and a demand-dampening slower EV adoption – Albemarle saw a 16% rise in lithium sales volume year-over-year.

Management expects the downturn to endure, so it has announced measures to adjust to these market conditions: streamlining business units and announcing workforce reductions of 6-7% globally, primarily impacting non-manufacturing roles.

"Through our strategic review of Albemarle's cost and operating structure, we have identified significant opportunities to reduce costs, improve productivity, and decrease capital spending," stated CEO Kent Masters. These efforts are projected to save the company $300 to $400 million annually.

Albemarle also plans to reduce capital expenditures significantly in 2025, setting a range of $800 million to $900 million to sustain its current assets. This budget cut aligns with the company's expectation that lithium prices may remain between $12 and $15 per kilogram for the foreseeable future.

Despite these challenges, Albemarle maintained its full-year outlook, citing improved productivity, higher lithium volumes, and long-term supply contracts, which helped offset the impact of declining market prices.

Looking forward, Albemarle and its peers remain hopeful that demand for lithium will surge later in the decade, particularly as North American EV sales hit record highs in the third quarter of 2024. The company expects EV prices to achieve parity with combustion-engine vehicles by 2025, supporting long-term growth in lithium demand.

The recent U.S. election has focused additional attention on the industry, as Donald Trump's return to office could favor domestic lithium production.

"A strong America cannot be dependent on imports from foreign adversaries for the critical minerals necessary to maintain our economic and military strength," Trump declared in a 2020 executive order.

Notably, Trump's final act before leaving office in 2021 was to green-light the Thacker Pass lithium mine, the largest known sedimentary lithium deposit.

His protectionist stance and close ties with Tesla CEO Elon Musk suggest that his policies may benefit domestic lithium producers.

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