Lithium deal lifts shares for Mineral Resources

MINERAL Resources shares have leapt more than 25 per cent after it signed up to a joint venture with Albemarle Corp, the world’s top lithium producer.

Albemarle will take a 50 per cent stake in the $US1.15 billion joint venture that will own and operate the Wodgina lithium mine in Western Australia and develop a plant producing lithium hydroxide, the two companies said in statements.

The move comes amid an expected boom in demand for lithium in rechargeable batteries that power everything from mobile phones to electric vehicles.

Shares in Mineral Resources, which has been looking for a funding partner, surged by as much as a third yesterday, while Albemarle shares finished flat on Wednesday.

The two companies have signed an exclusivity agreement and aim to reach a binding agreement by December 14, they said.

Albemarle has its main operations at the Salar de Atacama salt flat in Chile, but the pace of planned expansions has been slowed by regulatory, environmental and potential technical concerns, broker Canaccord said yesterday.

“Taxation changes in Chile are also reducing investment appeal in that jurisdiction. A pivot out of Chile is, therefore, not surprising,” it said.

The Mineral Resources tieup also flags a move by the global battery supply chain towards Australian producers amid a shift to higher energy-density batteries using lithium hydroxide. Australia’s lithium supply comes from hard rock, which can directly produce hydroxide, while production of hydroxide from Chile’s brines is a more expensive, two-stage process.

Wodgina currently exports unrefined hard rock ore.

The joint venture plans to build a plant to produce up to 750,000 tonnes a year of 6 per cent spodumene concentrate to feed a 50,000 tonne a year lithium hydroxide plant.

At 1504 AEDT yesterday, Mineral Resources shares were up $3.50, or 28.1 per cent, at $15.95.