UPDATE 2-Albemarle revises Australian Wodgina joint venture as lithium market sags

* Albemarle to get 60% stake in MinRes’s Wodgina mine

* Albemarle’s cash outlay cut to $820 mln from $1.15 bln

* MinRes to get 40% stake in Albemarle’s hydroxide plant (Recasts with Albemarle, S&P comments)

MELBOURNE, Aug 1 (Reuters) - Albemarle Corp, the world’s largest lithium producer, has revised a deal to buy into Australia’s Mineral Resources Ltd’s Wodgina mine to cut spending on the deal and better cope with a slump in the lithium market.

The new deal comes amidst weakness in the lithium sector, with prices for the metal expected to be subdued in 2019 after changes to China’s electric vehicle subsidy regime undermined demand from Chinese customers.

“We view the amended terms of the Wodgina Lithium Project joint venture as materially less ambitious and better suited to forecast market demand,” credit rating agency Standard & Poor’s said in a note.

Albemarle has now agreed to pay $820 million in cash for a 60% stake in the Wodgina mine in Western Australia, down from $1.15 billion for a 50% stake agreed in late 2018.

“The revised structure preserves the key features of the original transaction while reducing the overall funding requirement for both parties,” Mineral Resources’ managing director, Chris Ellison, said in a statement.

The companies also effectively put on hold plans to build a 100,000 tonnes a year lithium hydroxide plant at Wodgina, saving Mineral Resource the cost of building that in the near term.

Instead Mineral Resources will acquire a 40% stake in Albemarle’s Kemerton hydroxide plant, also in Western Australia, which will be fully funded by Albemarle.

“The timing and location of any further lithium hydroxide conversion capacity in this joint venture will be based on market dynamics, the forecasted demand of customers and will be funded 60-40 by Albemarle and Mineral Resources,” Albemarle said in a statement.

Investors welcomed the cut in spending requirements for Mineral Resources, sending its shares up 4% in a broader market that was down 0.4%.

Wodgina is touted by Mineral Resources as one of the “largest known hard rock lithium deposits in the world.” (Reporting by Sonali Paul in Melbourne; additional reporting by Ambar Warrick in Bengaluru; editing by Richard Pullin)