Albemarle pulls back on lithium M&A, flags output cuts
Albemarle says it is done with big takeover plays in the West Australian lithium sector after folding its $6.6 billion offer for Liontown Resources last month.
New York-listed Albemarle is cutting capital expenditure and will stay away from large-scale acquisitions amid concern about the slump in lithium prices.
Albemarle CEO and chairman Kent Masters. Bloomberg
“We will still look at M&A, but it’s not going to be at the same scale that we were, frankly, looking at six months ago,” Albemarle boss Kent Masters said.
Albemarle also confirmed that along with partners Tianqi and IGO Limited, it is considering cutting production at Australia’s largest lithium mine.
Albemarle downgraded full-year earnings forecasts to reflect weak lithium prices and lower sales from WA’s Greenbushes mine, where it has a 49 per cent stake in a joint venture known as Talison. Tianqi and IGO control the remaining 51 per cent.
North Carolina-based Albemarle signed off on doubling the size of its lithium hydroxide plant in WA’s south-west earlier this year in a move that would take its downstream investments in the state past $4 billion. Now, its growth projects are under review.
“In this softer market, we are taking a hard look at the level of our capital expenditure spending and the sequence of our projects,” chief financial officer Scott Tozier told analysts.
Mr Tozier indicated market conditions were a big factor in the Liontown decision. Albemarle, which had intended to debt fund the takeover, made reference to “growing complexities” when it walked away, in what was interpreted as a reference to Gina Rinehart building a 19.9 per cent stake in the target.
Mr Tozier said there had been “productive engagement with Liontown and as we learned more,
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