[ATTACH] [ATTACH] M&A at around the bottom of the cycle, is very...

M&A at around the bottom of the cycle, is very a smart move. Hancock had $19.90 billions cash as at 30 June 2023, generated $5B profit last year.


Courtesy to Robin Bromby @12 Oct 2023,
Full ownership, a deal with Albemarle, or with someone else?

It may be that Ms Rinehart has plans to go it alone, and build her own lithium empire.
That requires a great deal of heavy lifting.

Or she might be after holding the key to Kathleen Valley and partnering up with Albemarle.
Its area of expertise is downstream lithium processing, something with which Ms Rinehart might wish to become involved.

After all, her Hancock Prospecting has not been averse in the past to doing joint ventures on projects.
Or will Mineral Resources (ASX: MIN) come into the picture?

Recently that company’s Chris Ellison announced that MinRes had abandoned plans to build a downstream processing plant in China, clearly not wanting to become beholden to Beijing’s control.
Mr Ellison said he would prefer to develop processing in Australia even though it was more costly.
Mr Ellison and Ms Rinehart in partnership, building an Australian lithium empire?

Presumably, all will be revealed.

But what is increasingly certain is that the lithium sector will be dominated by very large players — a sector more like iron and much less like gold.

Aussie billionaires try to repeat iron ore domination with lithium empire

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0	Gina Rinehart, Australia's richest person, has flooded investment into some of the state's most prospective lithium plays.Source: Hancock Prospecting

Seven decades after Lang Hancock discovered iron ore in Western Australia and helped turn the province into a mining powerhouse, his daughter, Gina Rinehart, and another billionaire, Chris Ellison, are trying to do the same with lithium.

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Ellison and Rinehart have waded into at least three major mergers and acquisitions of early-stage lithium hopefuls since April, taking positions in the target companies that ultimately scuttled two takeovers by bigger players. The pair command vast financial resources — Rinehart is Australia's richest person, according to Forbes, and Ellison has benefited from Mineral Resources Ltd.'s success — putting them in a position to take control of the next wave of Australia's lithium production.
Australia is already the world's top lithium producer, according to S&P Global Market Intelligence data, and is poised to take global dominance in lithium as a supplier to the rechargeable battery industry as electric vehicle sales take off. The country has nearly 20 millions metric tons of lithium reserves and resources, a stable political climate and a long history of mining which prominently features Rinehart's family.
"The billionaires are at play here. Both Mineral Resources and Hancock Prospecting have recognized that this is Western Australia, it's their playground, they've seen opportunities there for an industry of scale, and they want to be a part of it," George Ross, senior analyst at Argonaut Securities, told S&P Global Commodity Insights. "They can afford these projects straight out of their books rather than the small players having to do dilutive equity raisings or take on cumbersome debt. That's the big thing. It would also benefit downstream processing facilities which are much more difficult to fund."
Not mining newbies
Hancock discovered iron ore in 1952 before establishing Hancock Prospecting Pty. Ltd. in 1955, then negotiated with Rio Tinto Group unit Hamersley Iron Pty. Ltd. in the early 1960s to further develop his discoveries. The company established a relationship with Japanese offtaker Marubeni Corporation, and production started at Tom Price later that decade. Rinehart became Hancock Prospecting's executive chairman in 1992.
Chris Ellison built Mineral Resources from a mining services provider into a minor iron ore player and then a major lithium producer. Both billionaires have now taken strategic positions in key early-stage lithium projects in Western Australia that are seen as a precursor to building on the state's position as the world's biggest lithium producing jurisdiction.
"Hancock was a very early mover in the iron ore space and the Rinehart family, and Hancock himself, did very well out of iron ore, and if you imagine Western Australia is going to be the center of lithium production having been the center of iron ore production, then the next logical step is for you to be involved in lithium," Paul Howard, senior mining analyst for financial services firm Canaccord Genuity, told Commodity Insights.
Taking stakes
This year has been a busy one for Ellison and Rinehart.
Lithium explorer Essential Metals Ltd.'s friendly takeover by Tianqi Lithium Energy Australia Pty. Ltd. was terminated April 21, four days after Ellison's Mineral Resources acquired 19.55% in Essential, a company that is now being acquired by Develop Global Ltd., in which Mineral Resources owns over 11%.
When Ellison swooped in as nonexecutive chair of Delta Lithium Ltd. in September, he effectively killed the change of control undertaking that Delta had agreed to with strategic investor Idemitsu Kosan Co. Ltd. in June, which was contingent on David Flanagan staying in the role of executive chairman. Now Mineral Resources holds over 17% of Delta.
"The corporates are taking a longer-term view on a higher-for-longer outlook for spodumene pricing, hence paying pretty decent fair to full value for these stakes in putting their foot on these projects," Michael Scantlebury, a resources analyst for Western Australian wealth management firm Euroz Hartleys, told Commodity Insights.
Rinehart's Hancock accumulated a 19.9% stake in Liontown Resources Ltd. in October, amid an attempt by US lithium producer Albemarle Corp. to acquire the Australian lithium developer. Industry sources said Rinehart's stake was what Albemarle was referring to when it talked about the "growing complexities" that led to the collapse of its bid for Australian developer Liontown on Oct. 15.

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Building a bigger industry
Also in October, Hancock bought 18.9% of Azure Minerals Ltd., most of which was acquired the day after Sociedad Química y Minera de Chile SA's (SQM's) Oct. 26 bid to acquire Azure. On Nov. 1, Mineral Resources acquired 12.29% of Azure.
SQM is still working on a deal, but the company would understandably be feeling "frustration," having invested in Azure "very early off rock chips before a hole was drilled, and [showing] a lot of faith in Azure's management delivering, which they have," Howard said.
Having the skill sets of experienced miners like the Hancock group and Mineral Resources on their share registers will benefit the progression of the preproduction projects in which they have invested, Morgans Financial analyst Max Vickerson told Commodity Insights.
In an Oct. 27 statement, Hancock Prospecting touted its "capacity to support and expedite development" of Azure's Andover lithium-nickel-copper-cobalt project in Western Australia, which it described as having "a long path and significant risks to navigate before its ultimate potential is known."
The Hancock group's decision to buy exactly 18.9% of Azure adds intrigue, Howard said, given SQM's takeover scheme of arrangement with Azure is contingent on no other shareholder taking 19%.
Ellison and Rinehart are "trying to build a bigger industry. We've got a head start on Canada's James Bay region and others," Ross said, but those regions are "10 years behind us, so if we can get a really booming hard rock lithium industry here, then we'll be the incumbent leaders to displace internationally."
Liontown, Mineral Resources and Hancock Prospecting declined to comment, while Albemarle and SQM did not respond to requests for comment.
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