Mineral Resources Limited (MinRes) has entered into binding agreements with Albemarle Corporation for two separate transactions.
The first transaction, being the restructure of the MARBL Joint Venture includes MinRes increasing its interest in the Wodgina lithium mine from 40 to 50 per cent and will continue to operate the mine.
MinRes and Albemarle have each committed to convert their respective share of Wodgina spodumene concentrate (to feed four 25,000 tpa conversion trains) into lithium battery chemicals through Albemarle-owned conversion assets or using third party tollers. Under this conversion arrangement, Albemarle will arrange conversion of Wodgina spodumene concentrate on behalf of MinRes.
Each party will fund their proportionate share of the cost of the conversion assets, with conversion cost payments to be made in stages. MinRes will make an initial US$350 million payment immediately following receipt of regulatory approvals for the Wodgina and Kemerton restructure, with other payments to be made as conversion capacity is developed and provided.
Additionally, Albemarle will increase its interest in the first two trains of the Kemerton Lithium Hydroxide Plant from 60 to 85 per cent, and will continue to operate the plant.
Albemarle will supply MinRes’ 15 per cent share of spodumene concentrate for use by Kemerton from the Greenbushes mine. MinRes will pay the benchmark price for its share of Greenbushes spodumene concentrate.
The parties will also terminate the existing marketing agreement (under which Albemarle exclusively marketed product) and MinRes will market its own share of lithium battery chemicals produced from Kemerton and Wodgina.
The Kemerton and Wodgina transactions are conditional on Albemarle obtaining approval from the Foreign Investment Review Board (FIRB) to increase its ownership interest in Kemerton and Western Australian Ministerial consent for the parties to change their ownership interests at Wodgina.
Consideration for MinRes’ increased stake in Wodgina is expected to be offset by consideration for Albemarle’s increased stake in Kemerton.
MinRes will continue to account for the existing MARBL JV at a 40% interest for both Wodgina and Kemerton until FIRB approval and Ministerial consent has been received.
The transaction has an effective date of 1 April 2022 and Albemarle is expected to pay MinRes a completion adjustment currently estimated to be A$150 million.
The second transaction, being a transaction to invest in lithium conversion assets, includes a commitment by the parties have to jointly own (subject to receipt of required regulatory approvals) lithium conversion assets, which will convert Wodgina spodumene concentrate into lithium hydroxide or lithium carbonate (lithium battery chemicals), up to a nominal capacity of 100ktpa and subject to receipt of required regulatory approvals to establish a Downstream Joint Venture.
Also, subject to receipt of regulatory approvals, MinRes will acquire a 50 per cent interest in Albemarle’s Qinzhou and Meishan plants in China.
Qinzhou is currently operating and has a design capacity of 25,000 tpa. The plant is expected to commence the conversion of Wodgina spodumene concentrate in early 2024.
Meanwhile, the Meishan plant is under construction with a design capacity of 50,000 tpa. The plant is scheduled to be commissioned by the end of calendar year 2024.
MinRes’ acquisition is conditional on obtaining Chinese regulatory approvals and any other competition approval (if required).
MinRes estimates its 50 per cent share of total funds to obtain a capacity of 100,000 tpa (50,000 tpa MinRes share) to be about US$660 million, implying an attractive capital intensity of US$13,200 per tonne.
The parties continue to study opportunities, including in Australia, for additional conversion capacity to process spodumene concentrate from potential future trains at Wodgina.
MinRes Managing director Chris Ellison said the agreements cement MinRes’ place as a world-leader in lithium mining and will leverage Albemarle’s strong track record in battery chemical production.
“By growing our battery chemicals business and expanding into global chemical marketing, MinRes will become one of the world’s largest fully integrated lithium chemical suppliers to auto manufacturers, capitalising on the increasing demand for sustainable battery mineral products.”