Lithium developer Lake Resources is divesting assets and axing jobs as a result of challenges from declining lithium prices, reported Reuters, citing the company’s CEO Steve Dickson.

The low prices have affected the company’s ability to secure customers and investors for its Kachi lithium brine project in Argentina, Dickson said.

On the sidelines of the Fastmarkets Lithium Supply and Battery Raw Materials Conference in Las Vegas this week, Dickson said: “Everything today is just driven by lithium price.

“The standard (lithium) price needs to be a lot higher for projects to move forward.”

A source familiar with the situation revealed that Lake Resources intends to reduce its workforce from 180 employees to approximately 20.

Dickson did not specify the number of layoffs but confirmed the company’s efforts to “resize the company from where we are at now”.

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The lithium sector has been hit hard by a significant price drop in the past year due to an oversupply from China and slower-than-anticipated growth in the electric vehicle (EV) industry.

Lake Resources is working on the Kachi project in partnership with tech start-up Lilac Solutions in the mountainous region of Catamarca province.

Despite initial interest from companies such as Ford, the remote location has led to substantial cost overruns, exacerbated by the falling lithium prices.

Last June, the company stated that lithium production from the Kachi project will be delayed for three years to 2027.

Referring to the project, Dickson said: “As soon as lithium prices go up, that is when we will start to see movement.”

Additionally, the estimated capital cost for the project has more than doubled to $1.38bn (A$2.07bn).

Lake Resources is also considering the sale of four lithium-rich plots in Argentina and plans to relocate from its offices in Houston to a smaller space, Dickson said.

The company had engaged Goldman Sachs to find a customer or investor for the Kachi project, a search initially expected to conclude by December. However, this process is now anticipated to extend into at least 2025.

Dickson noted: “We have got to find offtake partners and equity partners.”

The Kachi project is expected to have a production capacity of 25,000 tonnes per annum.