Albemarle, Mineral Resources Share Stake
Albemarle Corporation (NYSE:ALB) recently signed an exclusivity agreement with Mineral Resources Limited (MRL). The agreement relates to the potential creation of a joint venture with an equivalent stake of both the companies. The joint venture will own as well as operate the Wodgina hard rock lithium mine. In the long run, the companies want to develop a full-fledged lithium hydroxide operation at the site.
Located in Western Australia’s Pilbara region, Wodgina is a hard rock lithium world-class deposit. The mine is estimated to be having a life of more than 30 years. Elsewhere, the Albermarle Corporation recently suffered a major setback. Environmental regulators in Chile rejected its plans to expand out from its Salar de Atacama salt flat.
SEA Rejects Albermarle Plans
The Environmental Assessment Service (SEA) of Chile claims that the environmental impact statement did not include key information. The statement from Albemarle includes plans for building a new production plant. Its capacity will be able to produce 42,500 tons of lithium carbonate. However, lack of appropriate information led to its early termination, said SEA.
Consequently, in its resolution published on November 12, the regulator states, “The applicant doesn’t`t present the details necessary to rule out significant adverse impacts on the quantity and quality of renewable natural resources, including the soil, water and air.” SEA further adds that the company did not consider the threats to the Peruvian Tern, an endangered bird species inhabiting in the region.
Albermarle and MRL to Combine Expertise
The two companies, Albermarle and MRL are yet to discuss some definite things about the joint venture. However, they will surely combine their expertise so that the end result will be benefitting to both. The combination of world-class lithium production and marketing expertise from Albermarle, along with MRL’s mining capabilities and regional presence, will manage the marketing and sales of lithium hydroxide as a part of the long-term strategy.
Albermarle is probably planning to fund the purchase price for its 50% stake in the JV of $1.15 billion using new credit facilities and available cash. Experts believe that the transaction will keep on making a gradual addition to the earnings of Albermarle. The CEO of Albermarle, Luke Kissam, stated that the agreement is in accordance with the company’s corporate strategy of persuing M&A opportunities that can de-risk and accelerate their organic growth strategy. Further, Kissam adds that the company is confident of leveraging its world-class lithium resource with none other than the most experienced and knowledgeable mining company around like MRL.
Kissam believes that this agreement will help the company grow and meet the demands of its global customers. According to reports, after the complete ramp-up of the spodumene concentration plant, this joint venture between Albermarle and MRL will produce from the Wodgina site around 750 Ktpa of 6% spodumene concentrate. The JV will use this concentrate as feedstock for its future lithium hydroxide plant.