Albemarl Company (Albemarle), the world's largest lithium producer, said it is not economically viable to establish a supply chain in North America and Europe that could take control of critical minerals from China.
The US-based company's chief executive, Kent Masters, told the Financial Times that there was "not enough profit" to divert supplies of this key material for the electric vehicle industry to the West, due to low lithium prices and high operating costs.
"We've been trying to shift to the West ... but the prices we're seeing in the market right now don't allow that," Masters said, adding that the U.S. absolutely risks losing the race to China in the lithium competition.
Lithium prices have fallen more than 80 percent since the beginning of last year, due to a global slowdown in sales of electric vehicles and an unfavorable macroeconomic environment, which reduced demand for this metal, while the supply continued to grow, writes the FT.
"At the current price level, new entrants have no incentive to enter the market," said Adam Megginson, senior analyst at Benchmark Mineral Intelligence.
The slump in the lithium market is undermining Western efforts to build a domestic supply chain for metals key to the energy transition and reduce dependence on China, which has most of the world's refining capacity and some of the biggest mining companies.
The Albemarl company this month reported a quarterly loss of $1,1 billion due to low lithium prices and cut its workforce by 6-7 percent as part of a cost-cutting plan. Earlier this year, the company suspended plans to build a $1,3 billion refinery in South Carolina and partially halted a capacity expansion in Kemerton, Australia.
The company owns the only active lithium mine in the US, located in Nevada and is currently securing permits for a mine in North Carolina. Masters told the FT that the development of that mine will depend on "what the economic situation will be then".
"Once we complete the permitting process, we will have to make a decision whether to proceed with the project," Masters said. The company plans to spend 800-900 million dollars on capital investments globally next year, which is about half of this year's investments.
The slowdown in Albemarl's business comes at a time when producers are recording lower profits and withdrawing expansion plans. In August, Piedmont Lithium abandoned plans to build an $800 million refinery in Tennessee. In September, International Battery Metals shut down its lithium plant in Utah just two months after starting production.
"The gap between China and the rest of the world seems to be widening, rather than narrowing," said Oliver Montique, trade and supply chain analyst at Eurasia Group. China accounted for 65 percent of the world's lithium refining capacity last year and is expected to generate more than half of global supplies by 2040, according to the International Energy Agency (IEA).
Some companies are still moving forward. Last month, Rio Tinto bought Arcadium Lithium for $6,7 billion, the largest acquisition in the lithium sector to date. It is expected that the global offer from mining will grow by about 24 percent this year, and 21 percent next year, according to data from the Macquarie company, which does not expect prices to recover until 2027.
Although the US Anti-Inflation Act included tax breaks to encourage the use of non-Chinese materials and domestic manufacturing, Albemarl says the law has not accelerated supply chain construction in the minerals sector.
In addition to low prices, lithium producers face lengthy permitting processes, labor shortages and uncertain politics. New US President Donald Trump's pledges to "end the crazy mandate for electric vehicles" in the US and repeal the inflation-reducing law could further slow the adoption of electric vehicles and further lower lithium prices, analysts say, adds the FT.
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