Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
Hancock Prospecting, owned by Australia’s richest person Gina Rinehart, said on Tuesday it could help Liontown Resources build its lithium mine, after raising its stake in the developer that has accepted a buyout bid from Albemarle.
Rinehart’s company became a substantial shareholder earlier in September and now owns 10.7%, a Liontown shareholder notice on Monday showed.
Hancock Prospecting did not make any comment about its position on Albemarle’s offer for Liontown.
Liontown controls two major lithium deposits in Western Australia, including its flagship Kathleen Valley project, which is among the world’s largest and highest-grade hard rock lithium deposits, slated to start production in mid-2024.
Hancock said it built up its stake for no more than $3.00 a share, which was Albemarle’s buyout offer price, and an average bid price that was “well below” that level. Prices of hard rock lithium have fallen around 40% in the past few months, weighing on producers’ shares.
“Hancock can provide Liontown with the opportunity to manage its project execution and operational ramp-up risks where it is of value – and particularly in light of the inflationary market pressures that are creating challenges for project delivery across Australia,” it said in a statement to Reuters on Tuesday.
Hancock said Liontown’s targeted lithium recovery rate was higher than that of most existing and planned lithium producers in Western Australia.
Liontown declined to comment on Hancock’s views.
“Hancock has a demonstrated project development and operations ramp-up capability. This includes the highly successful $10 billion Roy Hill iron ore project in West Australia which was delivered on schedule and below budget, and was followed by an efficient production ramp-up.”
Hancock said earlier in September it may in future seek a board seat, when it raised its stake in Liontown to 7.72%, which made it a “substantial shareholder” under Australian securities law.
Liontown awarded its final construction project for approximately A$100 million on Sept. 12 to Monadelphous Group.
Liontown shares fell 2.8% on Tuesday to A$2.915.
(By Melanie Burton; Editing by Sonali Paul)
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