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Lithium, nickel rout could ignite fresh wave of M&A in ASX critical minerals sector
Mining industry insiders believe Gina Rinehart and Mineral Resources' Chris Ellison are both well positioned to pounce on distressed assets in the critical minerals sector on the ASX.

Jack Derwin and James Arbuthnott

12:15pm on 24 January 2024

The unfolding critical minerals rout that has put billions of dollars worth of projects at risk could open the door for Gina Rinehart and Mineral Resources' Chris Ellison to seize on distressed assets and expand their exposures to the sector.

Steep declines in the prices of nickel and lithium this year due to oversupply and concerns about waning demand for electric vehicles have already caused significant ructions on the ASX. Andrew Forrest's Fortescue Metals has mothballed a major nickel project, South32 is reviewing the viability of its Colombian nickel operation, Core Lithium has suspended mining and bankers for Liontown Resources pulled a $760 million debt facility.

In a sign of the severity of the crisis, Federal Resources Minister Madeline King will hold urgent talks with key players in the sector on Thursday which may result in government assistance.

But every crisis is an opportunity for some and industry observers believe the selloff may open the door for the likes of Rinehart and Mineral Resources to expand their exposure to the critical minerals sector.

“It’s almost inevitable that they’ll be in the market looking for takeover targets,” financial analyst and director of Climate Energy Finance (CEF) Tim Buckley said.

Rinehart last year built a 19.99% stake in Liontown and effectively scuppered a takeover bid for the company from US chemicals giant Albemarle. She has also teamed up with Chile's SQM to acquire ASX-listed lithium playAzure Minerals.

“Rinehart was building her stake at Liontown for $3 a share. Right now the company is trading at a 60% discount and on 11 February she’ll be able to enter her own lowball bid for one of the world’s best lithium resources,” said Buckley.