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Lithium price too low to build U.S. lithium refinery

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CEO says governments will need to support industry

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Albemarle doesn't have 'war chest' for M&A

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Auctions for lithium paused, may soon resume

By Ernest Scheyder

May 1 (Reuters) - Albemarle's stalled plans to

build the largest U.S. lithium refinery remain on hold due to

the ongoing global glut of the battery metal that has dragged

down market prices, the company's CEO told Reuters on Thursday.

That market malaise leaves the U.S. without a major site to

process lithium - the cornerstone metal of the energy transition

- and essentially dampens efforts by U.S. President Donald Trump

and other Washington officials to bolster the country's minerals

supply chain and curb its reliance on China.

The U.S. refines only small amounts of the ultralight metal

and has only one lithium mine, in Nevada, controlled by

Albemarle. Last year, the company paused plans to build a $1.3

billion processing plant in South Carolina due in part to

overproduction from Chinese rivals.

While lithium prices can vary by region and type, an index

of prices tracked by Benchmark Mineral Intelligence has dropped

by 74% in the past two years.

"We've been wanting to build this Western supply chain. The

economics just aren't there to build that plant out in South

Carolina," Albemarle CEO Kent Masters told Reuters. "The math

doesn't work today."

The company, which posted better-than-expected quarterly

results on Wednesday, has a lithium price at which it would

resume the project's development, but Masters declined to name

it.

"We don't have the confidence to say where (the lithium

price) is or where it's going, which is why we've kind of gone

to the strategy we have of making sure that we can compete at

the bottom of the cycle," said Masters.

Western minerals supply chains may need some kind of

government support in order to develop projects and offset

global competition, he added.

"I don't think private companies are going to be able to do

it on their own," Masters said.

M&A

While Rio Tinto and other rivals have been buying

lithium assets during the downturn, Masters said that Albemarle

has yet to find an interesting target.

"We don't have that war chest to go out and look at M&A

activity the way we might have if prices were at a different

level," he said. "If we saw some super quality resources we

could go after, that might be a little different."

In Chile, Albemarle is "pretty focused" on its work in the

Salar de Atacama and while it considered bidding to access other

salars, the company "didn't find them interesting," Masters

said.

Albemarle also is investing in direct lithium extraction

projects in Chile and the United States, but Masters declined to

say when either might progress.

Amid the market turmoil, Albemarle held auctions for the

battery metal as part of a bid to generate higher returns. Those

auctions were paused while the company prepared for its

quarterly earnings and may soon resume, Masters said.

"We kind of like the idea of understanding pricing better

and getting more transparency in the market," he said.