Lithium giant Albemarle halts Australia plant expansion, reviews costs on weak lithium prices

Lithium mining giant Albemarle will halt the expansion of a manufacturing plant in Australia, as the company reviews costs due to headwinds from weak lithium prices.

The impacted facility, the Kemerton plant in Australia, is where the company produces battery-grade lithium hydroxide for electric vehicles and other products. It will also idle a lithium processing line at the plant and focus production on a single line.

The workforce at Kemerton will be reduced by 40%, Albemarle CEO Kent Masters told CNBC in an interview Wednesday. The plant's production capacity will fall to 25,000 tons from 50,000 tons currently as the line is idled, Masters said.

Albemarle had originally planned to expand Kemerton to four processing lines with a capacity of 100,000 tons. The company is halting construction on the third line, after cancelling plans for the fourth line.

The decision comes as the company reported a second-quarter net loss of $188 million, or $1.96 per share, compared with a profit of $650 million, or $5.52 per share, in the year-ago period.

Excluding a $215 million after-tax charge due to capital project asset write-offs related primarily to the cancelled fourth processing line at Kemerton, the company earned 4 cents per share.

Sales fell 39% to $1.4 billion from $2.37 billion in the same period a year ago.

Shares were down about 1% in extended trading after the results.

The CEO said Albemarle has been executing against a cost-savings plan laid out in January as lithium prices weakened.

"We realized that the market is not moving in our direction, that prices are down," Masters said in the interview. "We think they're going to be down for a little bit longer, and we have to position ourselves to compete at this price level."

Lithium