Albemarle has signed an exclusivity agreement with Mineral Resources (MRL) to acquire a 50% interest in the latter’s Wodgina lithium project and form a 50/50 integrated lithium joint venture (JV) in Western Australia.
Subject to the negotiation of documents, the JV will own and operate the Wodgina hard rock lithium mine, which is located in the Pilbara region of Western Australia and has an estimated mine life of more than 30 years.
Albemarle and MRL will also develop an integrated lithium hydroxide operation at the resource site if the deal is finalised.
As part of the agreement, Albemarle will be responsible for managing the marketing and sales of lithium hydroxide produced by the proposed JV.
Albemarle will pay a consideration of $1.15bn in exchange for the 50% interest in the Wodgina mine. The purchase price is based on the project’s $2.3bn enterprise value.
The company expects the transaction to be accretive to its earnings.
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Albemarle CEO Luke Kissam said: “This agreement is consistent with our corporate strategy of pursuing M&A opportunities that can accelerate and de-risk our organic growth strategy.
“We feel confident in leveraging this world-class lithium resource with an experienced and knowledgeable mining company like MRL to help meet the growing demands of our global customers.”
The transaction will offer the company a 50% interest in all mineral rights within the Wodgina tenements, other than iron ore and tantalum, all fixed infrastructure and utility assets, the spodumene concentration plant and the project’s mobile mining equipment.
Albemarle and MRL will form a company with equal ownership interests to manage the JV.
The companies will jointly fund, design, build and operate a lithium hydroxide plant at Wodgina. Albemarle will contribute its core design to the proposed plant that will produce at least 50ktpa of battery grade lithium hydroxide in the first stage and 100Ktpa in the second stage.
Once the spodumene concentration plant reaches peak production, the JV project will produce up to 750Ktpa of 6% spodumene concentrate from Wodgina.
The lithium hydroxide plant will be fed by the concentrate produced from the spodumene plant.
The exclusivity period is valid until 14 December this year and the parties need to sign binding definitive documents by the end of this period.