Greenbushes co-owner Albemarle is set to mothball the remainder of its Kemerton lithium hydroxide operation and has doused expansion plans for the South West plant.
Greenbushes co-owner Albemarle Corporation is set to mothball the remainder of its Kemerton lithium hydroxide operation and has doused expansion plans for the South West plant.
The New York Stock Exchange-listed miner will idle the last standing train, Train 1, at its Kemerton lithium hydroxide processing operation and place the plant on care and maintenance, effective immediately.
Albemarle's chief executive Kent Masters said it was a "difficult decision".
He said that the recent lithium price recovery alone was not enough to offset the challenges facing Western lithium operations.
Today’s widely anticipated decision will impact about 250 of the 375 roles in Albemarle’s Western Australian workforce, with a small team remaining to manage care and maintenance at Kemerton.
"Idling operations at Kemerton was a difficult decision," Albemarle's Mr Masters said.
"It follows significant actions we have taken over the past two and a half years to reduce operating costs during an extended period of price volatility in the market.
"Unfortunately, recent lithium price improvements alone are not enough to offset the challenges facing Western hard-rock lithium conversion operations.
"This decision improves our financial flexibility and preserves optionality."
The Kemerton operation processes spodumene mined from the mammoth Greenbushes lithium mine, which Albemarle co-owns with IGO and Tianqi Lithium under a joint venture structure.
Kemerton was envisioned to run with 4 Trains with a total capacity of 100,000 tonnes per annum, which would have made it one of the biggest lithium processing operations outside China. It was expected to support a workforce of 1,000 at its peak.
The full shutdown comes after Albemarle placed Train 2 on care and maintenance and halted construction of Train 3 in 2024, as it grappled with depressed prices and high operating costs.
Albemarle now plans to cease any expansion plans for Trains 3 and 4, the market was told.
An aerial short of the Kemerton operation in 2023. Photo: Albemarle Corporation
Lithium, among other critical minerals, has been in the political spotlight amid the push to secure Western supply chains outside China's influence on the market.
Supporting home-soil downstream processing has been part of the Albanese government's Future Made in Australia mandate, with production tax credits proposed to be on the table from 2027.
But it's been a stuttering start to WA's downstream processing ambitions, which has so far been defined by a series of train shut downs, expansion plan scale-backs and job losses.
Tianqi Lithium Energy Australia (TLEA) – the JV between IGO and Tianqi – has long grappled with technical issues plaguing its Kwinana lithium hydroxide refinery, which is operating at just 35 per cent of nameplate capacity.
Wesfarmers' Covalent Lithium is the only operator in the process of ramping up production at its new lithium hydroxide refinery in Kwinana, as it works towards its nameplate of 50,000tpa.
Federal Resources Minister Madeleine King labelled Albemarle’s decision a blow for workers and disappointing news for communities in the South West.
"The difficult decision taken by Albemarle reflects a simple reality that it can be an immense challenge for projects to compete in global supply chains that are concentrated, opaque and subject to market distortion," she said.
"It is for this reason that the Australian government, alongside partners such as the US, UK, EU, Japan, Korea, Canada and others are actively working together to help build out alternate global critical minerals supply chains."
In January, Premier Roger Cook was asked at a press conference if he had concerns about the future of Albemarle’s Kemerton operations and whether it might be mothballed.
“Well, that's a decision for them, but the Kemerton plant is already producing lithium hydroxide, and it's an important contribution to the global supply chain,” he said at the time.
Chamber of Minerals and Energy WA chief executive Aaron Morey said the decision was a timely reminder of the hard realities of competing globally to build and sustain downstream industries in Australia.
"Resources are traded on global markets and today's decision illustrates how competitive those markets are," he said.
AMEC's Warren Pearce echoed the sentiment around the challenges for Western operators to compete on the global stage.
"The continued price volatility in the lithium supply chain and ongoing market interventions has made it extremely difficult for value-adding operations across all Western nations," he said.
Opposition energy spokesperson Steve Thomas said Albemarle's call came as no surprise but said it was a sad outcome for the South West economy and the impacted workers.
“The lithium industry has been suffering from low prices, which have dropped dramatically since 2022 thanks to oversupply in the market and a slower than expected take up of electric vehicles," he said.
“This has made the viability of all lithium projects problematic.
“At the same time Albemarle faced difficult issues with the cost and reliable supply of energy, which as a big energy user was making the situation more unstable."
Albemarle said today's call would have no impact on projected 2026 volumes and that it would meet customer demand for lithium hydroxide through other production channels.
In WA, Albemarle also has an interest in Mineral Resources' Wodgina lithium mine and holds some exploration assets, which it noted were not impacted by the Kemerton decision.
Albemarle's move comes as other lithium miners in the state are considering switching back on plants or operations that were also mothballed amid the market downturn.
Spodumene concentrate prices are beginning to recover from the lows of around US$600/t in mid-June to back above US$2,000/t in January.
But despite the modest rebound, the prices are still well below the highs of US$8,000/t in late 2022.
