Mining is famously cyclical, but that doesn’t make the downturns any more pleasant. At Charlotte’s Albemarle Corp., the struggles have gotten so serious that CEO Kent Masters is asking for the U.S., other nations and automakers to help break China’s dominant control of markets for minerals that are essential in production of batteries for electric vehicles.
His comments to the Financial Times followed a July 31 release citing “a comprehensive review of its cost and operating structure” at the world’s largest lithium mining company.
Employees at company headquarters have been told that consultant McKinsey is helping lead that effort, though a spokesman declined to confirm that. McKinsey is famous in corporate America for advising CEOs on payroll reductions. A 2022 book, “When McKinsey Comes to Town,” noted that the consultant’s clients had included Albemarle.
After the company’s earnings report last week, Masters cited a goal of putting Albemarle “within the cost structure and the supply chain that we can compete at the pricing that we see today, and if it stays that way long term, That’s what we’re planning for. And we don’t know when prices are going to rebound.”
Lithium prices have slumped more than 80% over the past 18 months because of abundant supply and slowing demand for electric vehicles, which rely on lithium batteries.
Masters told the U.K. newspaper over the weekend that “if we’re going to build western supply chains [for electric cars], then action needs to be taken now.”
The Inflation Reduction Act, hailed as President Joe Biden’s flagship climate change legislation, isn’t reducing the west’s reliance on China for Lithium and other materials, Masters said. “China is going to control these supply chains or we’re going to build western supply chains to compete,” he said. “I’m not sure it’s clear that the west is building those supply chains out right now.”
In his comments to analysts, the CEO said some rival miners are selling product below cost, which can’t go on forever. But last week the company said it would halt a production line and stop expansion of its Kemerton lithium hydroxide refinery in Australia. The move will create a $1 billion charge and cut 300 jobs.
China processes 65% of the world’s lithium, The Financial Times said. It benefits from cheaper construction costs, subsidies and technical know-how.
The $369 billion Inflation Reduction legislation sparked several electric car and battery factories in the U.S., including Toyota’s $14 billion battery operation under construction in Randolph County. Masters said the legislation “never really filtered down to critical minerals.”
Albemarle reported a $188 million net loss in the second quarter, compared with a $650 million profit a year ago. The company may need to raise $2 billion to fortify its capital position, The Financial Times said, citing Berenberg research. Masters said the company is well-positioned to weather a downturn.
Albemarle has more than 1,000 workers in Charlotte and 7,000 globally. Earlier this year, it said it was cutting back its technology park project in north Charlotte and a $1.3 billion lithium hydroxide processing plant in Chester County, South Carolina. The latter effort was expected to create 300-plus jobs and open in 2026.
Shares closed Wednesday at $79.06, its lowest price since July 2020.
