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Albermarle gets hits by lithium price fall

PUBLISHED

2024-05-02

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Albemarle, the world's largest lithium producer, joined rivals in Australia and other countries in being heavily affected by the downturn in world prices for the key battery material.

Australian rivals like Pilbara Minerals, Mineral Resources, and IGO have reported massive falls in revenue, earnings, or even operating losses—or worse, in the case of Core Lithium—suspension.

On Wednesday, Albemarle— which is a shareholder in the huge Greenbushes lithium mine in southwestern WA, as well as operating and building a series of lithium hydroxide refineries near Greenbushes—revealed that earnings had plunged to just $US2.4 million in the three months to March, from $US1.24 billion in the same quarter of 2023.

Lithium prices had fallen by more than 80% in the year up to March (meaning they have steadied at the sharply lower level because the falls were around 80% in the 4th quarter of 2023).

Quarterly adjusted core profit from its energy storage segment was $US198 million (which leaves out one-off items), compared with $US1.57 billion the previous year.

That was on a 47% slump in revenue to $US1.36 billion from $US2.58 billion a year ago (when the lithium price boom was turning down).

"Net income attributable to Albemarle of $2 million decreased by $1.2 billion, and adjusted EBITDA of $291 million declined by $1.5 billion from the prior-year quarter.

The decline in earnings was primarily due to lower lithium market pricing, as well as additional margin compression due to inventory timing and reduced equity earnings at the Talison joint venture (at Greenbushes), which more than offset favorable volumes," Albemarle explained.

The energy storage segment is the core business for Albemarle, which has operations in China, the US, Chile, as well as Australia.

The March quarter saw Albemarle slash costs, staff numbers, and planned investment spending—the latter by up to $US500 million for this year, while also raising more than $US2.1 billion in an issue of securities.

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