US Magnesium, which produces magnesium, lithium and other chemicals from Great Salt Lake, will lay off 186 employees and idle operations. The company notified the Utah Department of Workforce Services in September and said the layoffs would occur Nov. 25.
US Magnesium did not respond to KUER’s request for comment.
The company’s workforce at its plant in east Toole County is made up of between 100 and 249 employees, according to state data.
US Magnesium’s layoff notice said it decided to idle plant operations due to “deteriorating market conditions for lithium carbonate.” Lithium carbonate is used in the production of glass, ceramics and lithium-ion batteries — the linchpin of smartphones and electric vehicles.
Lithium production makes up a small percentage of the company’s overall operations, said Ben Stireman, deputy director of the Utah Department of Forestry, Fire, & State Lands.
“Lithium they've produced, as far as the time frame that they've been producing, you're talking in the tune of less than 2,000 tons total ever that's been produced off of the lake,” Stireman said. “Whereas magnesium, when you take into account their magnesium chloride product, you're talking like tens of thousands of tons each year.”
Lithium production is fairly new for US Magnesium, commercial production of the mineral began in 2020.
“In perspective, the 1,500-1,700 tons [of lithium] that they produced over the last few years, most commercial plants are producing like 10,000 tons,” Stireman said. “So in my perspective, they're still working on that technology.”
Global demand for lithium saw an increase during the clean energy transition since it’s an important element in batteries. That led to a price surge in 2022. But the following year, oversupply coupled with underperformance in the electric vehicle market led to a 32% decrease in the average U.S. price for fixed contracts.
In addition to the small scale of their lithium production, the company’s production of magnesium has been declining. This comes despite the mineral’s rising value.
A Utah Mining 2021 report from the Utah Geological Survey shows the price of magnesium rose by 57% from 2020 to 2021. That was the second-highest increase for any commodity that year. Over the same period, US Magnesium’s production of the metal fell by 25%.
From 2021 to 2022, production again dropped. According to the Utah Geological Survey’s 2022 Mining Report, magnesium production value at US magnesium decreased an estimated 51%. The company pointed to equipment failures as the cause of the falling rate. The price of magnesium metal increased by 114% that year.
Stireman noted that US Magnesium has only ever produced three magnesium products: pure magnesium, magnesium alloy and magnesium chloride. But, from his knowledge, they haven’t produced pure magnesium or magnesium alloy in two years.
“I believe they stopped in about 2022 was the last time we received a royalty payment for pure magnesium or magnesium alloy,” Stireman said. “These are the numbers that they're reporting to us. This is how they pay their royalties, based off of what they report to us.”
At peak production, Stireman believes US Magnesium was producing tens of thousands of tons of pure magnesium or magnesium alloy. Stireman said the last report for the minerals in 2022, was just under 6,000 tons.
“That's a major reduction from what they had done in previous years. And again, even in 2021, it was almost 27,000 tons of pure magnesium,” he said.
US Magnesium said in its letter to the state that plant operations would resume with a recovery in lithium carbonate pricing. For this reason, it hopes the layoffs are temporary, but cannot guarantee it.
