Albemarle Reports Over $1 Billion Loss in Q3

By Ernest Scheyder
(Reuters) – Albemarle, the world's largest lithium producer, announced a loss exceeding $1 billion in the third quarter and plans to reduce its capital budget due to a 71% decrease in lithium prices, essential for electric vehicle batteries.

The report highlights a supply glut affecting the lithium industry, prompted by excess supply from China and a slowdown in electric vehicle adoption rates, which have both led to falling prices for lithium.

Based in Charlotte, North Carolina, Albemarle (NYSE:ALB) is making strategic decisions with the expectation that lithium prices will remain around $12 to $15 per kilogram long-term, as stated by CEO Kent Masters. “We do think the price is going to be lower for longer,” he said, emphasizing the company's need to compete in this range.

The company has undergone its second reorganization in as many years, indicating that reducing its business units is vital to adapting to changing market conditions.

The restructuring, which involves cutting a minimum of 6% of its workforce, is projected to save between $300 million and $400 million annually. Moreover, the company has halved its 2025 capital budget to $800 million to $900 million.

Masters indicated that the reduced budget would focus on maintaining facilities that operate “at the lower end of the cost curve,” while specific sites were not disclosed.

Albemarle previously announced cost-cutting measures earlier this year, reporting a net loss of $1.11 billion, equating to $9.45 per share, compared to a net profit of $302.5 million, or $2.57 per share, in the same quarter last year.

Revenue dropped by over $1 billion to approximately $1.35 billion, though lithium sales volumes increased year-over-year. This revenue decline was somewhat mitigated by long-term contracts with clients, including Tesla (NASDAQ:TSLA).

In after-hours trading, shares decreased less than 1% to $96.50. Financial backing from Washington, including a recent $67 million grant from the Energy Department, has supported Albemarle, although the upcoming election of President-elect Donald Trump raises concerns about future funding. Masters remains optimistic, stating, “The energy transition is happening. It’s a global dynamic. We’ll have to see what Trump does.”

Future Demand Expectations
Lithium miners had a slight reprieve in September when CATL, a Chinese company, announced production cuts. Albemarle and its competitors predict rising lithium demand later in the decade. Notably, North American EV sales reached a record in the third quarter, with expectations that EV prices will align with those of internal combustion engine vehicles by next year.

Interest in the lithium market is surging, with Exxon Mobil (NYSE:XOM) exploring opportunities. Albemarle's rival, Arcadium, has agreed to a $6.7 billion acquisition by mining giant Rio Tinto (NYSE:RIO), creating the third-largest lithium producer globally.

Masters confirmed that Albemarle is not pursuing acquisitions at this time, stating, “At this stage, I don’t see us being acquisitive.” Discussions regarding quarterly results will take place on a Thursday morning call with investors, while Chile’s SQM, the second-largest producer, will release its quarterly results later this month.