Arcadium Lithium announced that it is reevaluating its lithium operations in Australia, following a significant drop in battery raw material prices. The decision comes as the lithium market faces a downturn due to rapid supply growth that has outstripped earlier high demand projections, partly due to slower-than-expected electric vehicle adoption.
The company is specifically assessing its Mount Cattlin operations in Western Australia due to high costs and decreasing prices for spodumene, a key lithium ore. CEO Paul Graves highlighted that the company is also implementing a global cost-cutting strategy as part of this review.
This move follows recent news that Albemarle, a leading lithium producer, has announced job cuts and halted expansion at its lithium hydroxide plant in Western Australia. Albemarle’s decision is part of a broader “comprehensive review” of its global cost and operational structure. Spot prices for spodumene in China have plummeted to around $940 per metric ton, the lowest level in nearly three years. Goldman Sachs projects that spodumene prices will average $800 over the next year.
Australia, which supplies nearly half of the world’s lithium, faces significant challenges as it is more expensive compared to South American brine producers. Analysts predict that Australia will bear the brunt of future production cuts, particularly as high-cost mines that are not fully integrated struggle with declining prices.
In contrast, high-cost production sites in China and Africa have already shut down, except for those integrated with chemical or battery production that can absorb costs through other revenue streams. Australian mines, such as Mt Marion, Wodgina, and Bald Hill, which are not fully integrated, are more vulnerable to price fluctuations.
Liontown Resources, which recently began production at its Kathleen Valley project, and Pilbara Minerals, which has completed an expansion, are among the few that continue to ramp up production despite the challenging market conditions.
Mineral Resources, another major player, shipped nearly 500,000 dry metric tons of spodumene in the last financial year, while Mount Cattlin shipped approximately 205,000 tons. The company has indicated in its latest quarterly report that it will continue to monitor the market closely, noting that current conditions are weaker than anticipated due to softer electric vehicle demand from the US and Europe.
