On a quiet back road in regional WA, Albemarle’s dream of building Australia’s biggest lithium hydroxide processing plant lies in tatters.
Huge tanks and piles of metal that were supposed to be used to build a new production train wait to be taken away.
Albemarle says the Kemerton project has contributed to a more than $1 billion net loss in the third quarter of 2024. (ABC South West: Bridget McArthur)
In May 2023, the US company announced it would double production at its Kemerton lithium refinery, north of Bunbury.
Two new processing trains were promised to bring the plant’s annual capacity to about 100,000 tonnes of lithium hydroxide — enough for 2.4 million electric vehicles.
The project was billed as the biggest investment by any company in the downstream processing of lithium in Australia.
This time last year, hopes remained high.
Albemarle had just signed three major contracts for train construction and workers’ accommodation management, collectively worth well over half a billion dollars.
It had also committed to a four-year lease on a new regional office hub in central Bunbury.
Bunbury port records show more than 23,700 tonnes of steel modules and equipment were shipped in from China for the project — the equivalent of more than 70 Boeing 747 jet planes.
Albemarle says it will not proceed with the construction of the third production train.
(ABC South West: Bridget McArthur)
But by January, plans for a fourth train had been shelved.
August brought a stop to the expansion altogether, with Albemarle announcing it would not proceed with the construction of the third production train and place the second into care and maintenance.
Last week, it revealed the millions of dollars in restructuring charges and asset write-offs from the Kemerton project had contributed to a more than $1 billion net loss in the third quarter of 2024.
For the same period last year, Albemarle tallied a net income of about $300 million.
Albemarle told the ABC train one was performing to expectation while train two’s return to operations depended on the market conditions improving.
“Albemarle’s world-class assets in Western Australia remain a strong pillar of the global portfolio,” a spokesman said.
Albemarle’s Bunbury offices are back up for rent just a year into its four-year lease. (ABC South West: Bridget McArthur)
Big dreams, low prices
The abandoned processing materials at Kemerton reflected a difficult year in the lithium market.
Oversupply and lower-than-expected electric vehicle (EV) uptake saw lithium prices drop, leaving few players unscathed.
The abandoned processing plant materials at Kemerton reflect a difficult year in the lithium market. (ABC South West: Bridget McArthur)
Arcadium Lithium, Pilbara Minerals and Liontown Resources were among those who recently announced pauses or reductions in operations in WA.
Analysts speculated Albemarle’s retreat from building out its lithium processing capacity in WA might not end with Kemerton, either.
On a recent earnings call, Albemarle chief executive Kent Masters said the company was “in discussions” about the number of trains it operated at Wodgina — a Pilbara-based lithium project it co-owns with Mineral Resources.
Lithium analyst Romano Sala Tenna said it cast doubt over whether WA — and Australia more broadly — had a future in lithium processing.
An oversupplied market and lower-than-expected EV uptake have contributed to a drop in lithium prices. (ABC South West: Ruslan Kulski)
“We just don’t … have the cost structure here in WA to be able to compete,” he said.
“For a global player like Albemarle who can look at any jurisdiction to build downstream assets, I think that’s becoming increasingly obvious.”
Mr Sala Tenna said higher wages, a comparatively cumbersome regulatory environment and lack of technological capabilities were making companies think twice about the future of their Australian operations.
Albemarle announced early last year it would double its lithium hydroxide processing capacity at Kemerton. (Supplied: Albemarle)
Unions say workers hit hardest
However, mining analyst Gavin Wendt said Albemarle would ultimately walk away relatively unscathed.
Albemarle’s share price started bouncing back after the Kemerton expansion project was canned, indicating investors backed the decision.
Mr Wendt said it also had Greenbushes to fall back on — one of the biggest lithium mines in the world also in South West WA, which has been uniquely resilient to recent market volatility.
But while the failed Kemerton expansion project might ultimately be a blip in the long run for Albemarle, unions say workers have felt the impact deeply.
Steve McCartney says workers have been hit hardest by the lithium downturn in WA. (ABC News: Grace Burmas)
The Construction, Forestry and Maritime Employees Union said some workers hired to help build the new trains turned up to Kemerton on the morning cuts were announced to find they had already been barred entry.
Meanwhile, the Australian Manufacturing Workers’ Union said those on the maintenance side of things who had retained their jobs were worried about their futures.
“It’s been a shock to people that have moved down here and invested to come down here, thinking they were going to be part of the new economy and a new future in the South West,” union state secretary Steve McCartney said.
“Especially workers that have left the coalfields to go start [work] in the new economy, only to find out that they’ve got the sack.”