I was expecting Hancock will reach to 15% and it happened now.
I believe TG and Gina will ask ALB to increase its offer to $4 or go away.
We will most probably see the board membership nomination by Hancock next week
As
@dynofish said the use of the phrase "Best and Final Offer" by ALB when the offer was presented to LTR has the legal effect of preventing them raising that offer however I think this will be fixed by an action which will be executed by Tim and Hancock and the highway to make a new offer will be opened to ALB. That's just a technical issue. So I'm not worrying about that.
I think Hancock will not buy the whole LTR but will sell its stake at a good price to ALB or will go to production together with us as a stakeholder, because I'm still thinking LTR is also too big to swallow for Hancock and lithium business is nothing similar to iron ore business. It's much more complicated.
15c increase in bids, then 50c increase, I now expect 100c increase.ALB's first bids started by 15c bid incremental, first $2.20, then 2.35, and then $2.50. But the last increase was by 50c. That was a big step towards to target.
However we are all saying here that even $3.50 is not enough.
I'm wondering how many people would be happy by a $4 offer!
More importantly we don't know if TG and GR would be happy with $4 or not.
ALBEMARLE HAS TO BUY LTR, BUT CAN'T BUY AT $3
As I explained before ALB needs more than 700kt high quality and low impurity spod concentrate feedstock (like Greenbushes spod feedstock) every year for its Kemerton lithium hydroxide refinery. And ALB needs it very much, but it doesn't have it all now.
ALB's Kemerton lithium hydroxide plant have two trains (25kt each) with 50kt capacity in total atm. They are adding another two trains atm and will reach to 100kt (plus 10%) annual capacity. That'll need at least 700kt+ spod concentrate as feedstock.
(ALBEMARLE TO DOUBLE LITHIUM HYDROXIDE OUTPUT IN AUSTRALIA - May 3, 2023)You can see train 1 & 2 are already producing (at low capacity) and train 3 & 4 are being build atm. The total cost of this plant is around AU$4b.
Greenbushes produces 1.4mt spod concentrate every year, they want to increase it 50% but there are hurdles. Its FY23 capacity will also be 1.4mt as indicated on IGO's preso which I put hear before.
ALB owns 700kt of that 1.4mt spod concentrate capacity because ALB 49% - Tianqi/IGO 51% in JV there.
Major part of that 700kt spod conc. is being sold to overseas offtake buyers (including Samsung and others).
Also Greenbushes mine has problems by the grades which are depleting from 2.3% which has been their head grade so far.
I posted this graphic here 4 years ago. This high grade pegmatite (C3 pit) was being mined for very long time, since 2009. I have made some markings on 2019. It was 300mt in 2009, and I was asking how many meters (actually million tonne of resource) left in 2019. They only have the high grade in that yellow spodumene zone, and it's being mined for long time at very high rate.
As I said before C1 area is weathered kaolin pit, nothing to do with its lithium. C2 area has low grade lithium around 1%. Cornwell pit is very old tantalum pit. They recently started digging out kapanga area but it's not high grade either. The only good one there is C3 pit which is the main source of high grade lithium ore.
By that 1.4mt spod concentrate production rate at Greenbushes mine they will run out of all high grade ore around 2031. Only 8 years later.
I have posted this graph below in Feb 2020 and handed it to TG at the same time in our meeting. He was very much interested in it at that time.
So ALB has big problems in Greenbushes.
Btw, I must remind that it's not only ALB has the problem, Tianqi and IGO also have feedstock problem with their Kwinana lithium hydroxide plant plant, but they are hiding their problem from their shareholders. Where they are going to find to find the spod feedstock to feed their Kwinana plant is unknown. Their no other LTR KV project to buy !!!However they invested billions of dollars on Kemerton plant (Same for Kwinana plant of Tianqi and IGO) and they can leave it idle after 8 years. It won't be a profitable operation and would be a waste of investment instead.
ALB has to secure a high grade and low impurity spod concentrate feedstock for its Kemerton plant. It's so simple.
I believe they will have to go up to $4 at least to have a chance to buy out our KV project.
Do think hat I'm happy with that. I want to go to production and get dividends. However it's TG's and GR's decision at the end.
(20min delay)