Albemarle plans to reopen Kings Mountain lithium mine, it will take years

AlbemarlePlans to reopen a resource-rich lithium mine in North Carolina will take longer than initially expected as collapsing lithium prices weigh on the company.

Albemarle, a leading lithium producer, had initially planned to reopen the Kings Mountain mine as early as late 2026 to increase domestic lithium production and support a U.S. electric vehicle battery supply chain.

“That will be a later date,” Eric Norris, president of energy storage at Albemarle, told CNBC. “It’s slowed down a little bit given the concerns we have, but we’re still making progress. It’s not that we’ve stopped it.”

Kings Mountain could produce enough materials to make 1.2 million electric vehicles per year. The mine sits on one of the world’s richest spodumene deposits, a source of lithium. There is currently only one operational lithium mine in the United States, at Silver Peak, Nevada, which is owned by Albemarle.

Albemarle does not have a firm date for when Kings Mountain will become operational, Norris said. The company is preparing to begin the permitting process, which will take two years. Construction will take several years before the mine is operational, according to the company.

The Biden administration has made establishing a battery supply chain, supported by domestic lithium production and processing, a top priority to end dependence on China, which dominates the world market. Albemarle received a $90 million grant from the Department of Defense to support domestic mining, which the company is using to help reopen Kings Mountain.

Kings Mountain was an operational lithium mine from 1937 until the 1980s, when owner Rockwood Holdings ceased operations to focus on Chile’s resources. Albemarle acquired Rockwood and the mine in 2015.

Albemarle is under pressure as global lithium prices have collapsed more than 40% since last year and 81% from 2022 highs, forcing the company to adjust its expansion plans. Albemarle suspended a chemical plant in Richburg, South Carolina, that would have processed lithium from Kings Mountain.

Kent Masters, CEO of Albemarle, said the industry still needs to significantly expand capacity as demand for electric vehicles remains strong, with global growth of more than 20% so far this year. However, lithium prices have fallen below the marginal cost of production as the supply of this product has expanded.

“It’s hard to justify investment projects where prices are today,” Masters said.

Lithium prices need to be at least $20 per kilogram to justify investments, Masters said. The average price in 2023 was $15 per kilogram. The CEO said he expects lithium prices to become less volatile, with lower highs and lower lows, as the market matures.

Albemarle’s profit fell 99% to $2.4 million in the first quarter, from $1.2 billion a year ago. Revenue fell 47% to $1.36 billion from $2.58 billion in the first quarter of 2023.

Although Albemarle was hit hard compared to last year, the company’s earnings largely met Wall Street’s expectations, while revenue exceeded forecasts. Investors reacted positively to the results, with shares closing up more than 5% at $125.30 on Thursday. On Friday, shares rose another 3%.