Albemarle slashes capex by delaying planned lithium investments

Albemarle Corp. is implementing additional cost-saving measures including delaying planned investments amid the current lithium pricing slump, executives said during their fourth-quarter 2023 earnings call on Feb. 15.

For 2024, Albemarle will lower capital expenditures by $300 million to $500 million compared to 2023 and will cut costs by more nearly $100 million — with more than $50 million this year — by "reducing head count and lowering spending on contracted services," among other measures, Albemarle Chairman and CEO Jerry Masters said.

Fourth-quarter 2023 adjusted EBITDA was a net loss of $315 million, a staggering 125.3% decline year over year, and net sales totaled $2.36 billion, down 10.1% compared to last year, according to the company's financial report.

"As we look to 2024 and the current market dynamics, we've identified certain strategic investments and projects across the enterprise that do not need to grow as fast in the short term ... the returns for new projects are not there at these prices," Masters said.

The lithium carbonate EXW China Battery sank to $13,425 per metric ton as of Feb. 7, down 83.1% from a Nov. 30, 2022, high of $79,650, according to S&P Global Market Intelligence data. The price was close to the $13,575/t seen at the end of the fourth quarter of 2023.

Albermarle will slow down US projects.

"At today's prices, the economics for new greenfield projects, particularly in the West, are not supported." said Masters. The company has decided to continue the permitting activity at Kings Mountain in North Carolina but has stopped construction and engineering work at the Richburg, SC, MegaFlex conversion facility until prices return.

The company will be focusing on "large, high-return projects that are significantly progressed near completion or in startup" while mergers and acquisitions activity will be "minimal," Masters said.

Projects on which development will continue include commissioning of the Maison lithium conversion facility and expansion of the Kemerton lithium conversion facility in Western Australia.

"We believe you're going to see enough projects ultimately come off at that inflection point where we start to get structurally short on supply [moving] forward from the latter part of the decade into the middle part of the decade," Eric Norris, Albemarle's president of energy storage, said during the call. "What that says is excessively low prices only aggravate excessively high prices potentially down the road."