Albemarle Shuts Kemerton Lithium Refinery, 275 Jobs Lost in Western Australia

Albemarle, a U.S. chemicals company, has announced the immediate cessation of production at its Kemerton lithium refinery in Western Australia. This decision will lead to approximately 275 job losses. The company cited elevated operating costs and sustained price volatility as reasons for the closure, which impacts Train 1 immediately. This follows earlier plans to mothball Train 2 and halt additional construction at the facility.

Immediate Closure Details

The immediate shutdown of the Kemerton lithium refinery, located approximately 150 kilometers south of Perth, will result in the loss of about 275 positions. This action expands upon a 2024 decision to mothball the Train 2 processing line and cease construction of any additional lines at the facility.

Company Rationale & Operational Status

Albemarle attributed the cessation of operations to recent increases in lithium prices proving insufficient to offset high operating costs amid prolonged price volatility. Kent Masters, Albemarle's chair and chief executive, highlighted that the decision came after two and a half years of intensive efforts to reduce operational expenses.

"Recent increases in lithium prices [were] not sufficient to offset operating costs during a prolonged period of price volatility."

The multi-billion-dollar refinery processes spodumene sourced from the Greenbushes lithium mine. While one source indicates the facility opened in 2022, another suggests operations commenced four years ago, seven years after construction began. Albemarle has assured that this decision will not impact its projected production volumes for 2026, with customer demand to be met through its other global operations.

Industry Insights & Economic Pressures

Industry figures and government officials offered various perspectives on the factors contributing to the closure:

Market Competitiveness: Mining commentator Tim Treadgold suggested the shutdown was "anticipated due to Australian processing projects becoming uncompetitive." He specifically highlighted Australia's energy system as a factor making mineral processing challenging compared to regions with lower energy costs, such as China.
Lithium Market Conditions: WA Shadow Minister for Energy Steve Thomas linked the closure to the "low lithium prices observed since 2022," attributing this to market oversupply and a slower-than-expected adoption of electric vehicles.
Processing Challenges: Aaron Morey, Chief of WA's Chamber of Minerals and Energy, stated that the closure "underscores the challenges of establishing and maintaining chemical and downstream mineral processing in Western countries." He called for government policies supporting efficient approvals, affordable energy, infrastructure access, and flexibility for new industries.
Cost Factors: David Miles, Vice President of Simcoa (a silicon smelter near Kemerton), cited increasing labor, energy, and compliance costs as key factors diminishing Australia's competitive position in mineral processing. He pointed out that China currently processes approximately 59% of the world's lithium.
Energy Transition Impact: Brant Edwards, CEO of Bunbury Geographe Economic Alliance, connected rising power costs to the WA government's plan to phase out coal-fired power generation by 2029. He noted plants at Collie and Muja are scheduled for closure by 2027 and 2029, respectively. Edwards described the energy transition as "difficult," emphasizing the significant capital investment required for new renewable projects and the increasing costs associated with aging coal assets.

Stakeholder Responses

Union Response: Steve McCartney, WA secretary for the Australian Manufacturing Workers' Union (AMWU), stated that the job losses represent "a loss of industry expertise." The union's immediate focus is on supporting the affected workers and engaging with the federal minister for mining. The WA branch of the AMWU has also urged the federal government to accelerate planned tax incentives for critical minerals processing.
Western Australian Government: WA Premier Roger Cook expressed "disappointment" regarding Albemarle's decision, affirming the government's commitment to promoting localized activity in the mineral processing sector. WA cabinet minister John Carey echoed this sentiment, describing the news as disappointing and reiterating the government's support for the critical minerals industry, noting a need to assess the specific reasons behind this scenario.
Federal Government: Australia's Resources Minister Madeleine King underscored "the importance of diversifying global critical minerals supply chains for economic and security reasons."

Broader Industry Context

Albemarle's decision is not an isolated incident; it occurs amidst broader challenges within Australia's mineral processing sector. Several other processing facilities nationwide are currently facing difficulties due to high operational expenses.

These include Glencore's copper processors in Queensland, Nyrstar's producer in Tasmania, and an aluminum smelter in New South Wales. Within Western Australia, Alcoa plans to close its Kwinana refinery, and BHP has already ceased operations at its Kalgoorlie nickel smelter.

Mining commentator Tim Treadgold suggested that Albemarle's decision could signal "broader issues for Western Australia's lithium-refining aspirations unless energy costs decrease."