https://www.engineeringnews.co.za
Construction|Energy|Motors|Operations
Construction|Energy|Motors|Operations
construction|energy|motors|operations

Tumbling lithium prices push Albemarle to fresh round of cost cuts

1st August 2024

By: Reuters

  

Font size: - +

Albemarle, the world's largest lithium producer, said on Wednesday it would slash costs for the second time this year and that everything but its dividend could be on the chopping block.

The aggressive move was caused by tumbling prices for the metal used to make electric vehicle batteries after the company swung to a second-quarter loss.

Shares fell 2.9% to $91 in after-hours trading.

The Tesla supplier and its peers have been buffeted in the past year by lithium oversupply from China and a softening of aggressive EV adoption rates that has dragged down prices for the ultralight metal and delayed expectations for how long the energy transition could take.

General Motors, for example, earlier this month backed away from its target of producing one-million EVs annually by 2025 in North America.

Albemarle, with operations across the globe, had already slashed staff in January. Yet lithium prices have continued to tumble, from an average of $20 per kilogram at the end of last year to a current range of roughly $12 to $15 per kg, the company said.

"The market is not improving. It's actually probably getting a little worse," Albemarle CEO Kent Masters told Reuters. "We're using the term 'lower for longer' from a pricing perspective, and we have to be able to operate through that downturn."

To save costs, the company is launching a "comprehensive review of its cost and operating structure" that should be complete by October, Masters said. Albemarle also plans to pause construction of an Australian processing unit and idle production at a second one at the site.

"We will look at everything to get us kind of a mean and lean position," he said, adding that additional layoffs and asset sales are on the table.

The company's dividend, which has been raised annually for 30 years, likely would not be affected. "It's important for our shareholders. So our plan is we would stick with that," he said.

The pace of EV demand growth across the globe has this year failed to keep up with robust expectations, spooking lithium industry investors. Goldman Sachs GS.N analysts, for example, doesn't expect global lithium demand to outpace supply until 2030.

RESULTS

Albemarle reported a net loss of $188.2 million, or $1.96 per share, compared to a net profit of $650-million, or $5.52 per share, in the year-ago quarter.

Excluding one-time items, Albemarle earned 4 cents per share. By that measure, analysts expected earnings of 41 cents per share, according to IBES data from LSEG.

Albemarle did keep its full-year profit outlook, helped in part by results from its catalyst division and cost cuts, which have saved more than $150-million this year.

Despite the price drop, Albemarle and its peers have repeatedly said they expect demand for lithium to jump later this decade as EVs go mainstream.

The Charlotte, North Carolina-based company plans to discuss the quarterly results on a Thursday morning call with investors.

Edited by Reuters

Comments

Showroom

Weir Minerals Africa and Middle East
Weir Minerals Africa and Middle East

Weir Minerals Europe, Middle East and Africa is a global supplier of excellent minerals solutions, including pumps, valves, hydrocyclones,...

VISIT SHOWROOM 
Rentech
Rentech

Rentech provides renewable energy products and services to the local and selected African markets. Supplying inverters, lithium and lead-acid...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Magazine round up | 01 November 2024
Magazine round up | 01 November 2024
1st November 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.096 0.148s - 192pq - 2rq
Subscribe Now