Albemarle takes proactive measures to re-phase growth investments; optimize cost structure under changing market conditions
press release; The Information
Albemarle Corp. has outlined a series of proactive measures underway to re-phase its organic growth investments and optimize its cost structure in response to changing end-market conditions, particularly in the lithium value chain. These actions are designed to unlock cash flow over the near term and generate long-term financial flexibility.
Albemarle expects its 2024 capital expenditures to be in the range of $1.6 billion to $1.8 billion, down from approximately $2.1 billion in 2023. This new level of spending reflects a re-phasing of larger projects in the near term to focus on those that are significantly progressed, near completion and in startup. Decisions made by the company include to:
- Commission the Meishan lithium conversion facility, which reached mechanical completion at the end of 2023;
- Complete commissioning activities for Trains 1 and 2 at the Kemerton lithium conversion facility and focus construction on Train 3;
- Prioritize permitting activities at the Kings Mountain spodumene resource and defer spending at the Richburg mega-flex lithium conversion facility;
- Defer investment for the Albemarle Technology Park in North Carolina; and
- Limit sustaining capital spending to the most critical health, safety, environmental and site maintenance projects.
The company is also pursuing actions to optimize its cost structure, reducing costs by approximately $95 million annually, primarily related to sales, general, and administrative expenses, including a reduction in headcount and lower spending on contracted services. Albemarle expects to realize more than $50 million of these cost savings in 2024 and to pursue additional cash management actions primarily related to working capital.
"The actions we are taking allow us to advance near-term growth and preserve future opportunities as we navigate the dynamics of our key end-markets," said Albemarle chief executive officer, Kent Masters. "The long-term fundamentals for our business are strong and we remain committed to operating in a safe and sustainable manner. As a market leader, Albemarle has access to world-class resources and industry-leading technology, along with a suite of organic projects to capture growth."
Related to the actions announced today, Albemarle will record a charge in the first quarter of 2024, primarily associated with severance and related benefit costs, exit and disposal activities, and asset write-downs.
The company will provide further details on its conference call to announce full-year 2023 results at 9 a.m. EST on Feb. 15.
The Information has reported that Albemarle has laid off 300 workers, or approximately 4 percent of its total workforce.
Photo from Shutterstock.