(Bloomberg) — Albemarle Corp. is shutting half of its current processing capacity in Australia and is putting the expansion there on hold amid a deepening price slump for lithium, a key ingredient in rechargeable batteries for electric vehicles.

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The world’s largest lithium producer said in a statement on Wednesday that it’s started a comprehensive review of its costs and operating structure. Albemarle is placing one of the two processing trains at its Kemerton plant in Western Australia in “care and maintenance”, and will scrap construction of a planned third one. It expects to take a charge of $900 million to $1.1 billion in the third quarter as a result.

The decision will result in the loss of 300 jobs and is “entirely due to market conditions and the commercial realities that lithium prices will stay lower for longer,” a spokesperson for Albemarle Australia said in an emailed response to questions.

Chinese Lithium carbonate spot prices have tumbled about 80% from a peak in 2022 to the lowest since July 2021, with slower-than-expected EV demand compounded by a supply glut. Some smaller, higher-cost miners have already shuttered mines due to the slump, including Core Lithium Ltd. In China, Zhicun Lithium Group Co. has placed two carbonate units into care and maintenance.

The market downturn has complicated plans by the US and its diplomatic allies to use Australian battery minerals as part of an effort to break reliance on Chinese output. Australia is the world’s largest supplier of lithium and is looking to ramp up production of the EV battery ingredient, as well as other critical minerals.

Albemarle, which is a US company, said in its statement it was maintaining its “full-year outlook considerations,” with cost improvements and volume growth expected to offset current low prices.

“This is a complex problem, and it is impacting international markets across the critical minerals sector globally,” Australian Resources Minister Madeleine King said in a statement on Thursday. “Current conditions in lithium markets highlight the importance of policy support for Australia’s critical minerals sector to help address distortions in global markets.”

King called on political rivals in parliament to support measures to bolster the domestic industry, including the government’s plan to introduce production tax credits in 2027 for lithium producers.

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Sydney-listed Liontown Resources Ltd. announced on Wednesday that it had reached first lithium production from its 400,000 ton per annum Kathleen Valley project, putting further price pressure on the market.

–With assistance from Ben Westcott.

(Updates with quote and job cut details in third paragraph)

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