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Arcadium weighs cuts at Australian Mount Cattlin mine

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China spodumene prices at three-year low

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Goldman Sachs sees lithium prices falling further in 2025

By Melanie Burton

MELBOURNE, Aug 7 (Reuters) - Arcadium Lithium ( ARLTF )

on Wednesday joined a growing list of producers reviewing

lithium operations in Australia amid a rout in prices for the

battery raw material that is expected to result in more

production cuts.

The lithium market is reeling from rapid supply growth that

has outpaced strong projections for demand from several years

ago as uptake of electric vehicles has been slower than

expected.

Arcadium is reassessing its Mount Cattlin operations in

Western Australia given high costs and falling prices of raw

material spodumene, CEO Paul Graves said on Wednesday as the

miner announced a round of cost cuts to its global business.

That comes a week after top lithium producer Albemarle

announced job cuts at its lithium hydroxide plant in the

state, where it paused an expansion as part of a "comprehensive

review" of its global cost and operating structure.

Reflecting compressed margins for producers, spot prices for

spodumene in top consumer China are hovering around

$940 a metric ton, the lowest in almost three years.

Goldman Sachs expects spodumene prices to average $800 over

the next year.

Australia which supplies a little less than half of the

world's lithium, and is higher cost than South American brine

producers, is likely to bear the brunt of the next round of

production cuts, analysts said.

In places like China and Africa, high cost supply has

already closed, except for integrated mines owned by chemical or

battery producers that have been able to turn profits elsewhere

in their business.

That leaves Australia where mines are not fully integrated,

which means their owners are more exposed to a downturn in

prices, said analyst Glyn Lawcock of investment bank Barrenjoey.

"If we don't get any more announcements, no more closures,

and the ramp ups that are underway continue, then it does feel

like there's probably a few quarters of tough footy for the

lithium space," he said.

Supply is still growing in some quarters from single asset

companies that have no choice but to continue building and

because it's their only source of cash flow, he added.

That would apply to Australia's Liontown Resources ( LINRF )

which has just started production at its 500,000 tons per year

Kathleen Valley project while Pilbara Minerals ( PILBF ) has also

just completed an expansion.

High cost mines in Australia include Mt Marion, Wodgina and

Bald Hill, owned by diversified miner Mineral Resources

, which declined to comment.

MinRes shipped just under 500,000 dry metric tons of the raw

material in the financial year ended in June. Mount Cattlin

shipped around 205,000 tons in the 2023 financial year.

Mineral Resources said in its quarterly report last month

that it would continue to "closely watch the market", as it

flagged a delay to a planned expansion at its Wodgina mine.

"The current market is not as strong as we had thought.

Prices have been impacted by softer EV demand from U.S. and

Europe," investor relations manager Chris Chong said on a call

to analysts.