Albemarle plans partial idling of two US lithium facilities

Pittsburgh — Albemarle will idle portions of its Silver Peak lithium mine in Nevada and Kings Mountain lithium hydroxide production facility in North Carolina this September through at least the end of the year due to short-term supply-demand imbalances and excess battery-grade lithium inventory buildup, company chief financial officer Scott Tozier said Aug. 6.

"We remain committed to the long-term operation of these facilities and currently plan to restart them in early 2021," Tozier told investors during a call.

Eric Norris, Albemarle's president of lithium operations, said Silver Peak provides lithium carbonate feedstock to Kings Mountain, which in turn produces about 4,000-5,000 mt of lithium hydroxide annually.

"We're going to be down for four months of that at this point," Norris said, referencing Kings Mountain's annual capacity. However, Albemarle officials declined to quantify the extent of the production cuts at either facility.

A representative for Albemarle was not immediately available for comment Aug. 6.

Albemarle's lithium sales in the second quarter slid 12.7% at $283.7 million as a result of low market prices and previously agreed-upon battery-grade lithium contract price concessions with customers, according to Tozier.

The company posted a Q2 net income of $85.6 million, falling from $154.2 million in the year-ago period.

Pricing pressure through Q3

Tozier said pricing challenges will likely continue into the third quarter as the market is expected to be pressured by low automotive production, high battery-grade lithium inventories, and reduced demand in smaller end-markets, such as glass and ceramics.

Albemarle CEO Kent Masters said there will likely be a lag between demand recovery and price response as inventories will first need to be worked off when additional manufacturing volume comes online.

Masters said Albemarle's new lithium production capacity from its La Negra lithium carbonate plant in Chile, and Kemerton lithium hydroxide plant in Australia is expected to come online at the end of 2021, pending market conditions and price recovery.

Albemarle is currently expanding La Negra to increase annual capacity to more than 80,000 mt from 44,000 mt. The Kemerton plant, currently under construction, is expected to have an initial annual capacity of 60,000-75,000 mt.

Development of both projects has been slowed in response to the coronavirus pandemic.