Recently, the persistent decline in lithium prices has compelled Albemarle Corporation, a global lithium mining giant, to revise its strategy and abandon its expansion plans in Australia. Albemarle announced that it would conduct a comprehensive review of its cost structure and operations, including halting the construction of a production line at its Kemerton lithium plant in Australia and conducting maintenance on another. The company emphasized that by optimizing cost control and increasing production, it aims to maintain its annual performance expectations to counter the current downward pressure on lithium prices.
Lithium Price Crash Leads to Mine Closures
Due to weaker-than-expected demand for electric vehicles and an oversupply of lithium, the spot price of lithium carbonate in China has plummeted by 80%, hitting its lowest level since July 2021. Weekly charts show that this price has declined for 11 consecutive weeks since May. As a result, small, high-cost miners such as Core Lithium Ltd. have been shutting down mines to cope with the crisis. In June, well-known Chinese lithium salt companies also began taking measures to try to stabilize market prices. With lithium prices continuing to decline, Albemarle’s stock has dropped by 34.8% this year, following a 33% decline last year.
Australia’s Lithium Expansion Adds Market Pressure
Despite falling lithium prices, Australia, the world’s largest lithium supplier, is persisting with its expansion plans, which is exacerbating the downward pressure on prices. The U.S. and its allies are attempting to increase lithium production in Australia to reduce reliance on China, but the market downturn has cast doubt on these plans. Australia’s Minister for Resources, Madeleine King, called it a complex issue affecting the global market, emphasizing the importance of policy support and urging parliament to put aside differences and back the government’s supportive measures, such as tax credits for lithium production through 2027.
Recently, Liontown Resources Ltd. was listed on the Sydney Stock Exchange, and its Kathleen Valley project achieved its first lithium production, with an expected annual output of 400,000 tons, further pressuring the lithium market.
In the face of the ongoing downturn in lithium prices, establishing long-term partnerships with downstream users to ensure a stable sales base and revenue is crucial. Investing in new technologies to improve lithium extraction efficiency and quality could also open up new market demand. Additionally, regular market research should be strengthened to improve the accuracy of market forecasts, allowing for timely strategy adjustments to adapt to market changes. Increasing market transparency would also help boost investor and partner confidence in the industry.
