Albemarle considers JV lithium hydroxide plant with Australia’s MRL

By IM Staff
Published: Thursday, 20 December 2018

Albemarle would pay $1.15 billion for the stake in the joint venture (JV), which will own and operate the Wodgina mine and aim to develop lithium hydroxide on site.

Albemarle Corp has entered into an exclusive deal with Australian miner Mineral Resources (MRL) that may lead to the development of new battery-grade lithium hydroxide plant in Western Australia.

The companies have agreed to consider the creation of a JV that would own and operate the Wodgina hard rock lithium mine and ultimately develop an integrated lithium hydroxide operation at the site. Albemarle would manage the marketing and sales of the lithium hydroxide produced by the project.

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.

Albemarle, which is based in the United States, would acquire a 50% interest in all mineral rights within the Wodgina tenements. This would, however, exclude iron ore, which would be retained exclusively by MRL, and tantalum, which would remain held by a third party.

The global speciality chemicals company would also own half of a planned spodumene concentration plant at Wodgina, with capacity for as much as 750,000 tonnes per year of 6% spodumene concentrate that will in turn be used as feedstock for the proposed lithium hydroxide plant.

The lithium hydroxide plant would produce at least 50,000 tpy of battery-grade material in the first stage, which would be increased to at least 100,000 tpy in the second stage.

Albemarle would pay $1.15 billion for its 50% stake in the joint venture, which it expected to fund with available cash and new credit facilities. The transaction is expected to be accretive to Albemarle’s earnings.

"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.

"We feel confident in leveraging this world-class lithium resource with an experienced and knowledgeable mining company such as MRL to help meet the growing demands of our global customers," he added.

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 slowed recently, however, with the spot price of battery-grade lithium hydroxide monohydrate (min 56.5% LiOH.H2O) at 110,000-120,000 yuan per tonne on November 15, unchanged since October 11, according to Fastmarkets’ assessment.