Piedmont Lithium announced on Tuesday a significant workforce reduction, laying off 27% of its employees as a response to the ongoing downturn in the lithium market. This move comes as lithium prices experience a sharp decline, compelling mining companies to implement production cuts and adopt cost-saving measures.
The battery metal producer, with operations including a joint venture in Canada and a lithium project in Ghana, anticipates completing the majority of its cost-saving initiatives by the end of the first quarter. The company aims to achieve approximately $10 million in annual savings through these measures.
Keith Phillips, CEO of Piedmont Lithium, stated, “These cost reductions while challenging, are necessary to position the company for the long term.” Lithium prices have plummeted by over 80% from their late-2022 peak, with the market outlook for the year remaining pessimistic. Allan Pedersen, principal analyst for lithium at WoodMac, commented on the current state of the lithium market, acknowledging the turbulent times it is experiencing. Despite the recent downturn, Pedersen highlighted the continued strong fundamentals of the industry, driven by global efforts to decarbonize.
UBS forecasts a 40% increase in global lithium supply in 2024, exceeding 1.4 million tons of lithium carbonate equivalent. Notably, top lithium producers like Australia and Latin America are expected to see significant production growth, with Africa poised to double its output, particularly driven by projects in Zimbabwe.
Piedmont Lithium, originally an Australian company but now based in the US, aims to establish itself as one of the world’s lowest-cost producers of lithium hydroxide. The company gained attention in 2020 when its stock surged following a sales agreement with Tesla to supply high-purity lithium ore minerals for electric vehicle production. However, this deal was paused and later renegotiated in January 2023, prompting Piedmont to seek alternative sources, such as its North American Lithium (NAL) project in Quebec.
Efforts to advance the Piedmont lithium project in North Carolina, initiated in 2018, are progressing as the company has provided additional information to state regulators. A decision regarding the open-pit mine is expected in the coming weeks, potentially making it one of the few lithium-producing sites in the US. Following the announcement, shares of Piedmont Lithium closed 7.5% lower in Sydney, reflecting investor concerns amid challenging market conditions.
