Ground Breakers: Albemarle’s appetite for WA lithium shows no signs of being satisfied
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Maybe Albemarle needs to get on Ozempic, the wonder drug that kills your cravings and tightens your waistline.
They’ve got an insatiable appetite for WA lithium and fresh off the rejection of their $2.50 a share offer for Liontown Resources (ASX:LTR) a couple months ago are grazing on scraps around the great lithium mining state to fill the gaping Kathleen Valley sized hole in their belly.
The US company is keen to find more, especially given its plan to double the scale of a new lithium hydroxide plant in Kemerton near the port city of Bunbury in a development likely to cost around US$1.5 billion.
Today’s deal is a $30 million payout for the Australian assets of Lithium Power International (ASX:LPI), which the Chilean brine hopeful is delivering into the global giant’s bulging portfolio rather than spinning off as the proposed Western Lithium IPO.
It gives a sense of both where risk capital is at and how desperate a bullish cadre of lithium majors are about long term demand. They want all the pegmatites they can get.
Albemarle will acquire tenements that deliver it some of the strike continuation of the Greenbushes lithium mine. Owned 49% by ALB and 51% by the duumvirate of Tianqi and IGO (ASX:IGO), that mine churns out over 1.3Mt of spodumene a year making it the world’s largest and highest grade lithium mine.
It also gets some interesting ground in the Pilbara right next door to Pilbara Minerals’ (ASX:PLS) Pilgangoora mine, which will be a 1Mtpa producer by 2026, and the Tabba Tabba discovery made (but little discussed) by Andrew Forrest’s Fortescue Metals Group (ASX:FMG).
Albemarle of course owns half of the Wodgina mine in the Pilbara, alongside Chris Ellison’s Mineral Resources (ASX:MIN).
It’s the latest premium lithium deal in WA, where majors have developed a taste for pizza slice purchases of either equity or projects from obscure juniors.
Mark Creasy-backed Azure Minerals (ASX:AZS) was the toast of the town last week after hitting some massive lithium results at its Andover project in WA’s North West. Chile’s SQM already identified its potential, entering a deal to acquire a near 20% stake for $20m earlier this year.
FMG has a small stake in Norseman explorer Lightning Minerals (ASX:L1M), vending tenements prospective for the EV metal into an IPO last year, while the Tianqi-IGO JV and MinRes have been stalking Pioneer Dome owner Essential Metals (ASX:ESS).
Finally, Gina Rinehart has taken an interest in the lithium business, inking a $26m earn-in deal to explore for lithium to sell into India with Legacy Iron Ore (ASX:LCY) and Hawthorn Resources (ASX:HAW) at the Mt Bevan project last week, and taking a reported stake in nearby developer Delta Lithium (ASX:DLI), which itself has attracted a ~$50m cornerstone investment from Japanese conglomerate Idemitsu Kosan.
An update from rare earths producer Lynas (ASX:LYC) has revealed how close the multi-billion dollar company was to a potential production shortfall, with it Kalgoorlie facility expected to deliver its first production of mixed rare earth carbonate this August.
It will dovetail with the Diggers and Dealers mining forum held in the famous mining Mecca.
The company is reliant on the successful ramp up of MREC output from Kalgoorlie, down the road from its world class Mt Weld mine, because the Malaysian Government is planning to place restrictions on the import of material to its Kuantan refinery which will result in the production of low level radioactive waste alongside its magnet rare earth metals.
It received a stay of execution on that front after the Malaysian authorities responsible for administering laws that impact the site extended a deadline to end cracking and leaching at Kuantan from the middle to the end of this year.
Should that extension not have come through, Lynas would have been reliant on stockpiles to fill a gap between the end of the process in Malaysia and the ramp up of its Kalgoorlie plant.
Lynas is still attempting to return its operating licence conditions to previous rules that would allow it to carry out cracking and leaching both in Kalgoorlie and Malaysia.
Stage 4 process commissioning at the $575 million Kalgoorlie facility is due to be complete by June 30 with the exception of a waste gas treatment plant and on site gas supply.
It will be trucking LNG to site to avoid shortages associated with timeline blowouts for the installation of a pipeline. It comes alongside labour shortages which continue to impact the mining and construction industries in WA.
“Further challenges have presented to the completion of these two items including lack of availability of suitably qualified people to fully staff 24 hour construction activities and late delivery of equipment required for finalisation of commissioning,” Lynas said.
“Whilst Lynas has sourced additional labour, the full effect of these two items cannot be fully mitigated at this time.”
Lynas says the start of MREC production in August is within its previously disclosed ramp up scenarios.