Piedmont Lithium (NASDAQ, ASX: PLL) said on Tuesday it had laid off 27% of its workforce as a sharp downturn in the lithium market is forcing miners to cut production and look for cost-cutting measures.
The battery metal producer, which has a joint venture (JV) operation in Canada and a lithium project in Ghana, said it expects to complete the majority of its cost saving initiatives by the end of the first quarter.
Piedmont Lithium noted it aimed to achieve about $10 million in annual savings. “These cost reductions, while difficult, are necessary to position the company for the long-term,” chief executive Keith Phillips said in the statement.
Prices of the lightweight metal have plunged more than 80% from a late-2022 record high, and the market consensus for the year is negative.
“The lithium market is going through tumultuous times,” Allan Pedersen, principal analyst for lithium at WoodMac, said last week. “While demand has nearly tripled in the past three years, reaching around one million tonnes in 2023, the growth rate is expected to moderate. Nevertheless, the industry’s fundamentals remain excellent, driven by the global push to decarbonize,” Pedersen added.
UBS said in January it expected global lithium supply to jump by 40% in 2024, to more than 1.4 million tons of lithium carbonate equivalent.
Output in top producers Australia and Latin America will rise 22% and 29% respectively, the bank said. Production in Africa is expected to double, driven by projects in Zimbabwe, according to UBS.
Piedmont, an Australian company redomiciled to the US, intents to position itself as one of the world’s lowest cost producers of lithium hydroxide.
The firm took centre stage in the junior lithium space in 2020, when its stock surged almost 84% in a day’s trading in Sydney after it confirmed it had signed a sales agreement with Tesla to supply the electric vehicle maker with high-purity lithium ore mineral for up to ten years.
The deal with Elon Musk’s company was paused and then renegotiated in January 2023, after Piedmont found a temporary source for the metal from its North American Lithium (NAL) project, a JV with Sayona Mining (ASX: SYA). Piedmont’s access to that Quebec supply is expected to end by 2026.
The company, which has been trying to get its eponymous lithium project in North Carolina up and running since 2018, said it had provided State regulators additional information on the project.
This means a decision on the open-pit Piedmont lithium mine should be ready in coming weeks. If approved, the operation would be one of the few lithium-producing sites in the US.
Shares in the company closed 7.5% lower in Sydney to A$0.19, leaving it with a market capitalization of A$374 million ($243m).