The world’s largest lithium producer, Albemarle, has declared that establishing a North American and European supply chain to challenge China’s dominance in critical minerals is economically unfeasible.
Chief Executive Kent Masters revealed that current market conditions, characterised by plummeting lithium prices and elevated operating costs, make it impossible to justify the substantial investments required for western supply chain development. The stark assessment comes as lithium prices have plunged more than 80 per cent since early 2023.
The US-based organisation recently reported a quarterly loss of £1.1 billion, leading to workforce reductions of 6-7 per cent. The company has also suspended plans for a £1.3 billion refinery in South Carolina and scaled back expansion efforts in Kemerton, Australia.
This market downturn severely undermines western ambitions to reduce dependency on China, which currently controls 65 per cent of global lithium refining capacity. The Asian superpower is projected to maintain its dominance, producing over half of the world’s supplies through 2040, according to International Energy Agency data.
Despite US government initiatives through the Inflation Reduction Act, which offers tax credits for non-Chinese sourced materials, industry experts suggest more comprehensive support is needed. Rich Nolan, National Mining Association president, advocates for stockpiles, offtake guarantees, and advance market commitments to boost domestic production.
The situation appears increasingly challenging for western nations, with analysts noting that China’s competitive advantage continues to grow. Political uncertainty, including potential policy changes under a future Trump presidency, could further suppress lithium prices by potentially rolling back electric vehicle mandates.
Industry forecasts from Macquarie suggest the oversupply situation may persist until 2027, with global mining output expected to increase by 24 per cent this year and 21 per cent in 2025. These market conditions, combined with permitting delays and workforce shortages, present significant obstacles to establishing a competitive western supply chain.
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