Next lithium giant says WA deals far too rich right now

Brad ThompsonReporter

Nov 5, 2023 – 2.12pm

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The chief executive-in-waiting of one the world’s biggest lithium players says the valuations awarded to early-stage projects in Western Australia are far too high.

Paul Graves, who will lead the lithium giant set to emerge from the merger of Australia’s Allkem and New York-listed Livent, punctuated the deal frenzy highlighted by the takeover tussle unfolding around WA explorer Azure Minerals.

Livent’s CEO Paul Graves pictured in Toronto earlier this year. Bloomberg

Mr Graves said the merged Allkem-Livent, known as Arcadium Lithium, would get “aggressive” about acquiring assets in WA once it had a better idea of the landscape.

“There’s a massive disconnect today – massive – between the value someone’s ascribing to a very, very, very early stage, or technically challenging, projects in Australia with only a maiden resource (and) without full ownership,” he said.

“There’s a lot of value being assigned to those by various people down there in Australia and so [it’s] a little challenging to me, to be perfectly honest, to know where the Australian M&A market plays out.”

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Mr Graves is currently Livent’s chief executive, and was describing his growth strategy for Arcadium once the $US10.6 billion ($17 billion) merger was completed.

Meantime, WA billionaires Gina Rinehart and Mineral Resources managing director Chris Ellison have emerged with big stakes in SQM-takeover target Azure.

MinRes disclosed on Friday that it had built a 12.3 per cent stake after buying shares above the agreed SQM offer price of $3.52 a share, which valued Azure at $1.6 billion.

Mrs Rinehart’s Hancock Prospecting has an 18.9 per cent stake. SQM, with 19.9 per cent, is weighing up its next move.

Azure owns 60 per cent of the Andover lithium project in WA’s Pilbara, with the other 40 per cent in the hands of exploration guru Mark Creasy.

Last week, Livent joined fellow New York-listed lithium and battery chemical player Albemarle in downgrading earnings guidance due to steep falls in lithium prices.

Arcadium will be chaired by former Woodside Energy boss Peter Coleman with global assets including Allkem’s Mt Cattlin mine at Ravensthorpe in WA.

Mr Graves said underground mining was key to extending the life of Mt Cattlin.

Last month, Albemarle walked away from a $6.6 billion takeover offer for Liontown Resources, which is developing WA’s first underground lithium mine, after Hancock Prospecting emerged with a 19.9 per cent stake.

Mr Graves said it was difficult to know what opportunities might still be available.

“We absolutely want to have a significant mining presence in Australia and that will almost certainly mean that we have to get pretty aggressive with our strategy of acquiring new assets over there at some point,” he said.

The enlarged Arcadium will slot in behind Albemarle and SQM as the world’s third-biggest producer with capacity to churn out 248,000 tonnes a year of lithium carbonate equivalent.

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