Arcadium Halts Mount Cattlin Expansion, Plans Transition to Care and Maintenance

Arcadium Lithium (NYSE:ALTM,ASX:LTM) announced on Wednesday (September 4) that it will place its Mount Cattlin spodumene operation in Western Australia on care and maintenance by mid-2025.

The company said in a press release that it will halt Stage 4A waste stripping, as well as any expansionary investment beyond Stage 3 following a sustained drop in spodumene prices.

According to Fastmarkets, spodumene prices fell close to 90 percent between January 2023 and January of this year, dropping from the US$7,500 to US$7,790 per metric ton range to US$800 to US$950.

Data from S&P Global Commodity Insights shows prices are now at the US$720 level.

The sharp drop has primarily been attributed to oversupply and reduced demand for electric vehicles.

“Production at Mt Cattlin beyond the current stage of the open pit cannot be justified in the current price environment for spodumene,” said Arcadium CEO Paul Graves. “We will maintain open and transparent dialogue with all of our stakeholders while supporting our employees and communities in Western Australia during this transition period."

The Australian Financial Review quotes Citi analysts as saying that Mount Cattlin breaks even at a spodumene price of US$1,200, with few Australian lithium mines being viable below US$1,000.

Romano Sala Tenna, portfolio manager at Katana Asset Management, told the news outlet that while the suspension of Mount Cattlin is expected to support lithium prices, there will be a delay before any significant impact is felt.

“There will be a lag because there are healthy stockpiles at the mines and in China on the docks,” he said.

Other lithium companies are also adjusting their strategies in response to the price drop.

Core Lithium (ASX:CHR,OTC Pink:CXOXF) suspended operations at its Finniss project in Australia's Northern Territory back in January, while this week Piedmont Lithium (NASDAQ:PLL,ASX:PLL) withdrew its application for a US government loan. The company originally intended to use the funds to finance its expansion plans.

Meanwhile, Albemarle (NYSE:ALB), the world’s largest lithium producer, implemented job cuts at the start of the year and at the end of July announced plans to downsize its Kemerton refinery in Western Australia.

Arcadium's decision on Mount Cattlin comes after the company said at the beginning of August that it would be deferring investments in two of its four expansion projects. Graves explained at the time that while the long-term outlook for lithium remains strong, the market is "clearly indicating" that new supply isn't needed at the pace previously expected.

The firm said it would pause investment in its Galaxy spodumene project in Canada, and would look at bringing in a partner to provide capital. It also said it would revisit the sequencing of its lithium carbonate projects in Argentina's Salar del Hombre Muerto. These moves are expected to cut capital spending by US$500 million over 24 months.

The company will provide further insight on its strategy and market outlook on its Investor Day on September 19.

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Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.