Arcadium Lithium (NYSE:ALTM,ASX:LTM) introduced on Wednesday (September 4) that it’s going to place its Mount Cattlin spodumene operation in Western Australia on care and upkeep by mid-2025.
The corporate mentioned in a press launch that it’s going to halt Stage 4A waste stripping, in addition to any expansionary funding past Stage 3 following a sustained drop in spodumene costs.
In accordance with Fastmarkets, spodumene costs fell near 90 p.c between January 2023 and January of this 12 months, dropping from the US$7,500 to US$7,790 per metric ton vary to US$800 to US$950.
Knowledge from S&P World Commodity Insights exhibits costs at the moment are on the US$720 degree.
The sharp drop has primarily been attributed to oversupply and diminished demand for electrical autos.
“Manufacturing at Mt Cattlin past the present stage of the open pit can’t be justified within the present value surroundings for spodumene,” mentioned Arcadium CEO Paul Graves. “We’ll keep open and clear dialogue with all of our stakeholders whereas supporting our staff and communities in Western Australia throughout this transition interval.”
The Australian Monetary Evaluate quotes Citi analysts as saying that Mount Cattlin breaks even at a spodumene value of US$1,200, with few Australian lithium mines being viable beneath US$1,000.
Romano Sala Tenna, portfolio supervisor at Katana Asset Administration, instructed the information outlet that whereas the suspension of Mount Cattlin is anticipated to assist lithium costs, there will likely be a delay earlier than any vital affect is felt.
“There will likely be a lag as a result of there are wholesome stockpiles on the mines and in China on the docks,” he mentioned.
Different lithium firms are additionally adjusting their methods in response to the value drop.
Core Lithium (ASX:CHR,OTC Pink:CXOXF) suspended operations at its Finniss challenge in Australia’s Northern Territory again in January, whereas this week Piedmont Lithium (NASDAQ:PLL,ASX:PLL) withdrew its software for a US authorities mortgage. The corporate initially supposed to make use of the funds to finance its growth plans.
In the meantime, Albemarle (NYSE:ALB), the world’s largest lithium producer, carried out job cuts at first of the 12 months and on the finish of July introduced plans to downsize its Kemerton refinery in Western Australia.
Arcadium’s choice on Mount Cattlin comes after the corporate mentioned initially of August that it will be deferring investments in two of its 4 growth tasks. Graves defined on the time that whereas the long-term outlook for lithium stays robust, the market is “clearly indicating” that new provide is not wanted on the tempo beforehand anticipated.
The agency mentioned it will pause funding in its Galaxy spodumene challenge in Canada, and would have a look at bringing in a companion to supply capital. It additionally mentioned it will revisit the sequencing of its lithium carbonate tasks in Argentina’s Salar del Hombre Muerto. These strikes are anticipated to chop capital spending by US$500 million over 24 months.
The corporate will present additional perception on its technique and market outlook on its Investor Day on September 19.
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Securities Disclosure: I, Giann Liguid, maintain no direct funding curiosity in any firm talked about on this article.
