Mineral Resources (MinRes) has announced a strategic decision to place its Bald Hill lithium mine in Australia under care and maintenance. This move, effective immediately, will impact approximately 300 jobs. The decision comes in response to a prolonged downturn in lithium prices, a trend impacting the global battery metal market.

The global lithium market has been grappling with oversupply, primarily driven by rapid production growth in regions like Africa and China. This surge in supply has outpaced demand, largely fueled by the electric vehicle (EV) industry. However, recent slowdowns in EV sales have further exacerbated the market imbalance.

MinRes' decision is not isolated. Several other lithium miners have implemented similar cost-cutting measures and production reductions. Piedmont Lithium has reduced its workforce by 48% since February 2023 and Liontown Resources has also trimmed production plans for its Kathleen Valley project and initiated cost cuts. Pilbara Minerals too reduced production at its primary Pilgangoora mine and temporarily halted operations at its Ngungaju ore processing plant.

MinRes expects to ship its final spodumene concentrate from Bald Hill in December 2024. The company has revised its fiscal 2025 shipment forecast to 60,000 dry metric tonnes (dmt), significantly lower than the previous estimate of 120,000 to 145,000 dmt.

"We will continue to monitor lithium prices and site operating costs with a view to recommencing operations once conditions improve," MinRes stated in a press release.

MinRes' share price declined by 6.5% following the announcement and has experienced a nearly 50% drop year-to-date. The company's decision to mothball Bald Hill reflects the challenging market conditions and underscores the need for strategic adjustments to ensure long-term viability.

Chris Ellison, Managing Director of MinRes said, "Placing Bald Hill on care and maintenance is a prudent decision but one not made lightly. The decision aligns with the work we have done across the company in recent months to reduce costs. Bald Hill is a high-quality asset with a long-term future."

Australian lithium mines are economically viable at spodumene prices below US$1,000 per tonne. The current market dynamics, characterized by oversupply and weakening demand, have forced miners to make tough decisions to preserve cash and mitigate losses.

MinRes' decision to mothball their Bald Hill highlights the significant impact of the lithium price downturn on the industry. As the market continues to evolve, it remains to be seen how long these challenging conditions will persist and when a recovery in lithium prices might materialize.