Albemarle Corporation has deferred plans to construct a fourth lithium hydroxide processing unit at its Kemerton site in Western Australia, the Australian Financial Review reported.
The report said the move posed a challenge to Australian Prime Minister Anthony Albanese's initiative to enhance domestic processing of critical and battery minerals.
Albemarle’s decision comes only eight months after it announced its intention to double the facility's capacity.
Disapppointing
This development marks another setback for Australia's critical minerals industry, which has recently faced significant job losses and operational cutbacks at various mining sites, including at the Ravensthorpe nickel, Panoramic nickel and Core Lithium mines in the Northern Territory.
Mining giant BHP (ASX:BHP) Group hinted at potential operational challenges for its Western Australia nickel operations, suggesting that cost-saving measures might be necessary in response to the current industry struggles.
“The nickel industry is undergoing a number of structural challenges and is at a cyclical low in realised pricing. Nickel West is not immune to these challenges,” BHP said in a statement.
“Operations are being actively optimised and options are being evaluated to mitigate the impacts of the sharp fall in nickel prices.”
There are doubts now if BHP will push ahead with a $500 million refurbishment of its Kalgoorlie nickel smelter.
A decision is expected in the next 18 months.
Wider strategy
While Albemarle has committed to proceeding with the third processing train at Kemerton, the postponement of the fourth unit represents a significant investment loss for Western Australia's economy, estimated at around US$600 million.
Albemarle, in partnership with Tianqi and IGO, operates Australia's largest and most profitable lithium mine at Greenbushes.
The partnership is currently evaluating the possibility of scaling back production in response to declining lithium prices.
The cutbacks at Kemerton are part of Albemarle's wider strategy to reduce expenses and enhance cash flow amid a more than 80% decrease in lithium prices over the past year.
The company aims to cut annual expenditure by US$95 million, with a capital spending budget for 2024 projected to be US$300-$US500 million lower than previously planned.