Mineral Resources has sold 50% of its Wodgina lithium mine to Albermale, the world’s biggest producer in a deal worth $US1.15 billion (around $A1.6 billion).
The sale was revealed in New York overnight Wednesday and will boost Mineral resources (MinRes) shares when trading re-opens on the ASX on Thursday morning.
MinRes shares closed at $12.45 on the ASX on Wednesday.
Mineral Resources has had a 49% stake on the market and held talks with numerous buyers in recent months.
Albermale is the world’s largest producer of battery raw material lithium and will set up a joint venture with Australia’s Mineral Resources to develop its Wodgina hard rock lithium mine and build a plant to produce lithium hydroxide for batteries.
Albemarle says that under the deal it will acquire a 50% interest in all mineral rights within the Wodgina tenements, other than iron ore (which will be retained exclusively by MRL) and tantalum (which remain held by a third party), all fixed infrastructure and utility assets, the spodumene concentration plant and the mobile mining equipment.
The parties would jointly manage the JV, through a company to be owned in equal shares by the parties.
After construction and ramp-up of the spodumene concentration plant, the JV is expected to produce up to 750Ktpa of 6% spodumene concentrate from Wodgina which is planned to be used as feedstock to the future lithium hydroxide plant (outlined below).
The two companies will also fund and build a plant at the mine site to produce lithium hydroxide for batteries, the company said. Albemarle will have the right to market and sell all of the lithium.
The first stage of the project will produce around 50,000 tonnes per year of lithium hydroxide for batteries, rising to 100,000 tonnes in the second phase.
The deal looks like an attempt by the US-based company to hedge its bets in lithium. It is facing greater government scrutiny over its business in Chile, where it is looking to expand production from the Atacama Desert. It produces lithium from brine under the desert 9the same desert where BHP’s huge Escondida copper mine is located).
The Financial Times reported that in October Chile’s nuclear regulator, which is in charge of quotas for lithium production in the country, denied Albemarle’s request to increase production in the country.
Demand for lithium is forecast to triple over the next decade due to rising sales of electric cars, which use the lightweight metal in their batteries.
“We feel confident in leveraging this world-class lithium resource with an experienced and knowledgeable mining company like Mineral Resources to help meet the growing demands of our global customers,” Luke Kissam, Albemarle’s chief executive, said in the statement.
Wodgina is in the Pilbara region and has already started shipping spodumene ore to Chinese and other buyers.
