Lithium heavyweight Albemarle is ramping up activity, and its interest in WA’s hard rock mines is kicking up a gear with a $US1.2 billion deal on the table.

Mineral Resources (ASX:MIN) revealed this morning that it had inked an “exclusivity agreement” with Albemarle for the potential sale of a 50 per cent stake in its Wodgina lithium mine in WA’s Pilbara.

Investors loved the news, driving shares up over 32 per cent.

The deal would see the pair form a joint venture to produce spodumene concentrate and lithium hydroxide.

Spodumene is the main lithium bearing mineral mined from most hard rock lithium mines around the world.

Lithium hydroxide is often cheaper to produce from hard rock mines than brine operations like those found in Chile.

Albemarle already has a 49 per cent stake in Talison Lithium, which operates the Greenbushes mine — the world’s largest hard rock lithium mine — 250km south of Perth.

And the US-based giant has received environmental approval to build its $1b lithium hydroxide plant at Kemerton, about 17km north-east of Bunbury in WA’s south.

It is expected to be WA’s largest lithium hydroxide plant.

Albemarle is stepping up its investment in Australia because of “a significant acceleration in demand for lithium hydroxide” from battery makers.

The company’s interest in WA picked up after it received a blow from Chilean regulators, who refused to allow it to sell more lithium from its brine operations in the Salar de Atacama region of Chile — which is regarded as the world’s richest deposit of the metal.

Investors coming back to lithium

Investor confidence appears to be returning to the beaten-up lithium small cap space — general market volatility aside — as metal prices stabilise and a slew of significant global announcements puts electric vehicle (EV) adoption on the fast track.

Lepidico (ASX:LPD) chairman Gary Johnson said that while 2018 had been a challenging year, things appeared to be looking up.

“Calendar year 2018 has proved to be a more challenging period for lithium equities, with the spot lithium carbonate price in Asia losing around half of its value from the high posted in early 2018,” he said.

“As a result, sentiment towards lithium companies deteriorated and share prices, including Lepidico’s came under significant pressure.

“More recently the spot lithium price has risen modestly, and lithium equity prices appear to have stabilised.”

Lepidico is using its own technology to produce lithium carbonate from non-conventional sources, including tailings — the materials left over after processing ore to separate valuable material from uneconomic material.

Battery-grade lithium carbonate is used to make lithium-ion batteries.

Lepidico plans to build a $3 million Perth-based pilot plant — or demonstration facility – to show off its technology to potential sales and finance partners ahead of development of its larger phase one processing plant.

The company is targeting commercial production for 2020.

Lithium Australia (ASX:LIT), meanwhile, revealed today that its technology had achieved recoveries of over 90 per cent lithium.

Shares added over 4 per cent to trade at 9.7c on Thursday morning.

Lithium Australia plans to be the first Australian company to do everything from mining lithium to making batteries.