Amidst a growing global demand for lithium, primarily for the production of electric vehicle batteries, a power play is unfolding in the Australian lithium sector.
Albemarle Corp, the global chemical colossus, is making strategic moves to strengthen its foothold in the Australian lithium market. The company, having already acquired a 4.3% stake in the West Australian (WA) miner Liontown Resources through its subsidiary RT Lithium, isn’t stopping there. It’s on its third bid in merely five months. Previous non-binding offers came in at $2.35 and $2.20 a share in March and last October respectively.
However, it’s not just Albemarle showing interest. Australia’s iron ore mining magnate, Gina Rinehart, is also eyeing a piece of the lithium pie. Her company, Hancock Prospecting Pty Ltd., recently confirmed a 7.72% stake acquisition in Liontown. This isn’t merely an investment for Rinehart; she’s indicated a desire to help guide the company’s direction and potentially even obtain a board seat. Hancock’s recent statement highlighted their intention to support Liontown’s growth, particularly in “downstream value add in Western Australia.”
Both Liontown and Albemarle have reached an agreement allowing Albemarle to commence due diligence to bolster its bid. This process, expected to last around four weeks, has been granted on an exclusive basis. Meanwhile, the Liontown stock is reaping the benefits of this corporate attention, rewarding its early investors with handsome returns. Especially those who took the leap of faith in 2018 when the company’s shares were a mere 3¢ a piece.
Gina Rinehart isn’t new to the Australian mining scene. Beyond her interests in lithium, she also owns half of the Pilbara’s lucrative Hope Downs iron ore mines. Managed by global mining heavyweight Rio Tinto, this venture hasn’t been without its share of drama. Rinehart is currently entangled in a legal wrangle with descendants of her father’s business associates, who are attempting to recover billions in iron ore royalties.
Liontown Resources, headquartered in Perth, is a promising entity in the lithium sector. Not only does it own a high-potential early-stage lithium project, but it’s also signed supply agreements with auto industry titans like Tesla Inc. and Ford Motor Co. Hancock lauds this venture, identifying its potential to operate on a grand scale, albeit acknowledging the inherent risks of resource conversion and metallurgical recovery.
As this corporate tango between Rinehart, Albemarle, and Liontown plays out, it signifies the booming significance of lithium in the global market. The metal, essential for powering the next generation of transportation, is undoubtedly becoming a hot commodity.
