Piedmont Lithium cuts 27% of workforce as prices plunge

Piedmont Lithium (NASDAQ: PLL; 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-saving measures.

The battery metal producer 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,” CEO Keith Phillips said in the statement.

Piedmont, which has its joint venture the North American Lithium (NAL) operation in Quebec with Sayona Mining (ASX: SYA), 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.

Prices of the lightweight metal, an essential component of electric vehicle (EV) batteries, 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 consultancy Wood Mackenzie, 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,” he said. 

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.

North Carolina project

Piedmont, an Australian company redomiciled to the U.S., intends 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 EV maker with high-purity lithium ore for up to 10 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 NAL mine. 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 with additional information on the project.

This means a decision on the open-pit Piedmont lithium mine should be ready in the coming weeks. If approved, the operation would be one of the few lithium-producing sites in the U.S.

Shares in the company closed 7.5% lower in Sydney to A19¢, leaving it with a market capitalization of A$374 million ($328.9 million).