Ground Breakers: Albemarle's got a +US$1bn plan to double WA hydroxide plant

Albemarle approves US$1 billion expansion of Kemerton plant in WA
At 100,000tpa, two additional processing trains will make it the largest outside China from 2026
Gold miners surge as prices cross US$2000

Lithium prices have cratered in 2023 so far, but that is doing virtually nothing to dent the growth ambitions of the world’s biggest companies.

Albemarle has clearly got ambitions to expand its West Australian production profile, having launched a super-premium — but still rejected — bid for Liontown Resources (ASX:LTR) in March in the hopes of snaring its near-production 500,000tpa Kathleen Valley spodumene mine.

The rationale for the $5.5 billion offer is now becoming clearer, with Albemarle and the WA Government revealing it will begin construction right away on the third and fourth processing trains at its Kemerton lithium hydroxide plant.

Soon to be 85% owned by the US lithium giant after it restructured a JV also including lithium plants in China and the Wodgina mine with Mineral Resources (ASX:MIN), Albemarle will invest another US$1 billion on top of the more than US$1b its tipped into the first two trains at Kemerton, doubling its nameplate production capacity to 100,000tpa.

That would make Kemerton the single largest lithium hydroxide processing facility outside China.

Construction is expected to start right away, with Albemarle to employ a workforce of 1000 at its peak and 850 when the plant, fed by its share of the Greenbushes mine, is operational.

(NB: Albemarle says spod from its share of the Wodgina mine near Port Hedland is processed in China).

The first product from the expansion is expected to be delivered in 2026.

“Albemarle has been a lead player in the multi-billion dollar battery and critical minerals processing industry that WA has successfully established in less than a decade,” WA Mines Minister Bill Johnston said.

“We look forward to seeing Albemarle and the downstream processing industry continue to expand in WA.”

Albemarle will also build a workforce accommodation precinct near the WA town of Australind for $140m which will eventually become a residential estate, with 90% of the plant’s current operating workforce of 480 people living locally in WA’s South West.

Chinese lithium prices moderate

There are signs lithium prices have sunk too low for carbonate producers in China and reached what is for now a bottom.

After sliding more than 50% this year, Chinese hydroxide and carbonate prices rose last week by over US$2500/t to ~US$30,500/t and US$26,500/t respectively according to Fastmarkets.

On the flipside, its spodumene spot assessment fell sharply over the past fortnight from US$5313/t to US$4050/t.

It is a reminder there is no one size fits all when it comes to the technically complex and opaque lithium market.

Mr Lithium, Joe Lowry, an industry veteran who runs consultancy Global Lithium, says the downward trend in lithium prices was hardly a ‘price crash’.

FYI – 中国 continues to attempt to manipulate the #lithium price but yes even @catl_official thought price got too low.

CO3 price from China to Japan in March remained in the $70s so the contract indexing didn’t result in a price crash but rather a limited downward trend. pic.twitter.com/hWjxRSJWy8

— Joe Lowry (@globallithium) May 2, 2023

Gold miners lead the way as price hits US$2000

While we’re all out here wallowing about the interest rate rise that shocked middle Australia and our mainstream economists, there’s bigger fish to fry over in the US where the debt ceiling is again closing in on the US Government.

It is the latest ruction over in the States, where the fragile nature of its banking sector was underlined by JPMorgan’s bailout this week of First Republic Bank.

This worrying news has investors piling back into bullion again, with prices lifting 0.5% to US$2004/oz over night, crossing the psychological US$2000 mark yet again.

On an Aussie dollar basis gold was paying $2974/oz this morning.

“Gold gained amid a surge in demand for safe haven assets amid the uncertain economic backdrop. Prices for the precious metal jumped the most in a month as investors become increasingly concerned about the US hitting its debt ceiling,” ANZ’s Adelaide Timbrell said in a note.

“Negotiations between both sides of US politics are at a standstill. This comes ahead of the FOMC meeting, where the market expects another rate hike. However, the US banking crisis adds another level of complexity to the outlook for the US economy.”

The response from equities was swift.

While the broader materials sector was down 0.75%, gold and lithium stocks are winners today.

Evolution Mining (ASX:EVN) rose 4.6% while Northern Star Resources (ASX:NST) and Newcrest Mining (ASX:NCM) lifted 3.47% and 2.48% respectively.

Lithium purveyorPilbara Minerals (ASX:PLS) gained 2.32% with IGO (ASX:IGO) also up 1.15%.

The mid-tier was dominated by high-flying goldies. Gold Road Resources (ASX:GOR), Silver Lake Resources (ASX:SLR), Ramelius Resources (ASX:RMS) and De Grey Mining (ASX:DEG) were the standouts, with Regis Resources (ASX:RRL), Bellevue Gold (ASX:BGL) , Perseus Mining (ASX:PRU) and Capricorn Metals (ASX:CMM) also strongly supported.