The world’s leading lithium producer, Albemarle Corporation (ALB), reported a challenging third quarter, facing a net loss of $1.1 billion amidst a continued downturn in lithium prices. This slump, fueled by a supply surplus from China and a slower-than-expected adoption of electric vehicles (EVs), has put pressure on the industry.
Despite the challenging market conditions, Albemarle saw a 16% year-over-year increase in lithium sales volume. However, the company anticipates the downturn to persist. In response, Albemarle has announced strategic measures to adapt to these market conditions, including streamlining business units and implementing 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. Additionally, Albemarle plans to significantly reduce capital expenditures in 2025, setting a range of $800 million to $900 million to maintain its current assets. This budget cut aligns with the company’s expectation that lithium prices may remain between $12 and $15 per kilogram in the foreseeable future.
Despite these challenges, Albemarle maintained its full-year outlook, citing improved productivity, higher lithium volumes, and long-term supply contracts, which help offset the impact of declining market prices. The company remains optimistic about the long-term prospects of lithium demand, driven by the growing EV market. North American EV sales hit record highs in the third quarter of 2024, and Albemarle expects EV prices to achieve parity with combustion-engine vehicles by 2025, supporting long-term growth in lithium demand.
The recent US election has brought additional focus to 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.
Looking forward, Albemarle and its peers are hopeful that the demand for lithium will surge later in the decade. The company’s commitment to long-term growth and its strategic response to market challenges position it for success in the evolving lithium market.