Albemarle Shifts Strategy: Chengdu Site to Care and Maintenance, Focus on Lithium Carbonate

Albemarle

US lithium producer Albemarle is making significant operational changes in its strategy. The company announced that its Chengdu site in China will be placed into care and maintenance (C&M), and it will shift a portion of its Qinzhou production from lithium hydroxide to lithium carbonate. These moves reflect Albemarle's ongoing efforts to adjust its production processes amid a challenging financial year.

Financial Losses and Restructuring Measures

Albemarle reported a significant financial loss of $1.2 billion for 2024, a stark contrast to the $1.6 billion profit the company posted in 2023. This loss includes restructuring charges and asset write-offs. The company is focusing on reducing operational costs to improve its financial position in the coming years.

Despite the financial setback, Albemarle achieved notable growth in its lithium sales. The company sold 203,000 metric tonnes of lithium carbonate equivalent (LCE) in 2024, marking a 26% increase compared to the previous year. The company expects a modest sales volume increase of 0-10% in 2025.

Strategic Shift in Production and Cost Optimization

In line with its restructuring efforts, Albemarle plans to reduce its capital expenditure (capex) by $100 million, bringing the total capex for 2025 to between $700 million and $800 million. This follows a reduction of more than $450 million in capex during 2024. Albemarle's shift from lithium hydroxide to lithium carbonate production in Qinzhou is part of its strategy to optimize its production network.

Approximately 50% of Albemarle's energy storage products are sold through long-term contracts that are indexed and typically last for 2-5 years. These contracts include price floors and a 3-month price lag, helping the company maintain stability in an uncertain market.

Kent Masters, Albemarle's Chairman and CEO, stated, “We are taking decisive actions to reduce costs, optimize our conversion network, and increase efficiencies to preserve our long-term competitive position.”