Albemarle Corp signs $1.15bln lithium JV with MRL

United States-based specialty chemicals company Albemarle Corp has signed a deal that creates a joint venture with Mineral Resources Limited (MRL) to develop a battery-grade lithium hydroxide plant in Western Australia.

The $1.15 billion agreement gives Albemarle a 50% stake in MRL’s Wodgina hard rock lithium mine and will see the companies eventually develop an integrated lithium hydroxide operation at the site.

Excluded from the agreement at Wodgina are mineral rights to iron ore, which would be retained exclusively by MRL, and tantalum, which would remain held by a third party.

After closing of the acquisition and completion of the construction and ramp-up of the spodumene concentration plant, Wodgina is expected to produce approximately 100,000 tonnes per year of lithium carbonate equivalent (LCE). This is planned to be used as feedstock for the future lithium hydroxide plant.

The parties would jointly fund, design, build and operate a battery-grade lithium hydroxide plant to be constructed at Wodgina in two stages of up to 50,000 tonnes a year of LCE each.

Wodgina is in the Pilbara region of Western Australia and is a hard rock lithium deposit with an estimated mine life of more than 30 years.

The transaction has been approved by the boards of both companies and is expected to close in the second half of 2019, subject to antitrust and other regulatory approvals along with the satisfaction of other customary closing conditions.

The two companies entered the exclusive deal in November, Fastmarkets reported at the time.

“This agreement is consistent with our corporate strategy of pursuing M&A [merger and acquisition] opportunities that can accelerate and de-risk our organic growth strategy,” Albemarle chief executive officer Luke Kissam said in November.

There has been a series of deals showing how participants at different stages of the lithium supply chain are opting to strengthen their position through vertical partnerships.

“Given the size of the lithium market today and where it needs to be in a few years, we expect a lot more of the same – more offtake agreements, joint ventures, partnerships and mergers and acquisitions,” Fastmarkets MB head of battery raw materials research William Adams said.

Increasing global demand for electric vehicles, mobile devices and grid storage has created a supply-led surge in prices for lithium, a key raw material for batteries.

Downstream demand has nonetheless slowed recently, with the spot price of battery-grade lithium hydroxide monohydrate (min 56.5% LiOH.H20) at 100,000-110,000 yuan per tonne on December 13, according to Fastmarkets’ assessments.

Learn more about Fastmarkets’ lithium pricing methodology and read the latest lithium price spotlight here.

All lithium carbonate, lithium hydroxide and lithium spodumene prices are available in our Battery Raw Materials Market Tracker. Get a sample of the report here.

Andrea Hotter

ahotter@fastmarkets.com

Published

Andrea Hotter

December 17, 2018

15:42 GMT

New York