The Electric: Albemarle Wants a Premium Price for U.S.-Made Lithium
A senior U.S. lithium industry executive has called for Western car and battery companies to pay a premium for lithium refined in the U.S., arguing that prices for the metal are too low to cover the cost of building and running processing plants there.
Global lithium prices—effectively set in China, which processes most of the world’s supply of the metal—have fallen more than 80% since the start of last year. Eric Norris, president of energy storage at Albemarle, the world’s largest lithium producer, said that at those prices, U.S. lithium producers can’t afford to build processing plants at home—a goal of U.S. policymakers, who want to create a national battery supply chain to compete with China’s.
Norris, speaking Tuesday at the Fastmarkets battery metals conference in Las Vegas, argued that auto and battery companies should pay a “U.S. price” for lithium, higher than the price set in China. “You can’t use a China price in a U.S. market,” he told me after his speech. “It’s a different product. It should have a different differentiated value.”
Norris also pushed for more U.S. subsidies under the Inflation Reduction Act, which he said doesn’t do enough to incentivize lithium production at home. The IRA offers a 10% tax credit for production facilities, but Norris said, “That’s not sufficient,” without specifying what Albemarle is looking for,
Norris’ overture reflects the dire conditions for miners and refiners of lithium, nickel and cobalt. Lower metals prices have led to much cheaper batteries, as we have reported. But they have hurt the share prices of the mining companies: Albemarle’s stock price has plunged 55% over the past year; Lithium Americas is down 76% over that period and Pilbara Minerals 33%.
In January, Albemarle halted construction of a planned lithium refinery in South Carolina. It had planned the refinery to process lithium from Kings Mountain, N.C., where the company is reopening a decades-old mine. Albemarle also has lithium mines at Silver Peak, Nev., in Australia and Chile.
The share prices of Chinese lithium producers have also declined—Ganfeng Lithium Group and Tianqi Lithium are both down 43% year to date. But state support, in addition to lower labor and other costs, helps Chinese companies weather such downturns.
Some conference attendees were skeptical of Norris’ idea. Rodney Hooper, an investor with RK Equity, told me that automakers won’t pay more when they are scrambling to cut electric vehicle costs to attract ambivalent consumers and that consumers will resist higher prices if costs are passed on to them.
Speaking on a panel, Joe Lowry, president of Global Lithium, a consulting firm, also said that talk of a U.S. lithium premium is unrealistic: “If people are building projects based on expecting a…premium, maybe they should be selling insurance.” Daniel Jimenez, founding partner of iLiMarkets, a lithium consulting firm, said Chile and Australia—both of which, as signatories of free trade agreements with the U.S., are eligible for IRA credits—may refine most of the lithium the U.S. needs for the next five years or more.
Ford declined to comment. General Motors did not respond to an email.