Goldman Sachs recently said it estimated a surplus of 200,000 tonnes of lithium carbonate equivalent, or 17% of global demand, this year. It anticipated the situation to push producers, particularly Australians, to “substantially” reduce output to balance the market.
The US-based lithium giant had announced earlier this month it was mulling how to maintain growth, cut costs and optimize cashflow in the face of current market headwinds.
At the time, it predicted layoffs and said it would defer spending on projects, including a massive refinery project in South Carolina.
According to Monday’s news report, Albemarle job cuts affected its legal, mergers and acquisitions, marketing, materials sciences, research and development and recycling teams.
Analysts at BMI Research, a unit of Fitch Solutions, said the miner’s decision was not surprising, as the majority of its investment focus is on major lithium expansions through conversion assets, which leaves it vulnerable to disruptions in the market.
Dominant revenue stream
BMI expects lithium to remains Albemarle’s main revenue stream. It also sees the company prioritizing low-cost lithium projects in the longer term, which will help it benefit from an uptick in lithium demand and elevated prices.
The price of lithium has tumbled more than 80% in the past year to $13,200 per tonne, its lowest level since 2020, data from Benchmark Mineral Intelligence shows.
BMI Research expects prices to continue to be weighed down by poor supply-demand dynamics in the near term, which has the potential to dent Albemarle’s profit margins.
“The company has the ability to further reduce capital expenditure to maintain liquidity,” the say in a note. “Its strong financial position enables it to explore M&As and joint-venture formation in the longer term as one of its disciplined investment approaches to growth.”
BMI noted that accelerated EV production through 2030 and elevated lithium prices will support Albemarle’s revenue in the longer term.
Albemarle did not immediately respond to a MINING.COM request for comment.
This article was published by: Cecilia Jamasmie
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