Marketspeculation links Wesfarmers to lithium
· BRIDGET CARTER, SCOTT MURDOCH
· THE AUSTRALIAN
· 12:00AM NOVEMBER 20, 2018
As Wesfarmers sets Coles supermarkets adrift,the market is questioning what is the next move for the Perth-basedconglomerate. Some believe its focus remains on chemicals.
Chief executive Rob Scott has given littleaway about where the company may outlay large sums of cash for an acquisition,but some chatter in the market suggests it has cast its eye over MineralResources’ Wodgina lithium project.
It may sound far-fetched, but apparentlyWesfarmers, which now counts some of the country’s best private equitydeal-makers within its ranks, is said to be conscious of deals in the lithiumspace.
IBISWorld says Australian lithium output hasincreased over the past five years in response to export demand.
Much of the strong interest is driven byanticipation of a growing use of electric vehicles, powered by lithiumbatteries.
Wodgina is a Port Hedland lithium projectowned by Mineral Resources and a minority stake has been for sale throughMacquarie Capital for some time.
Attention turned to Wesfarmers this month whenspeculation emerged that an Australia-based “downstream” company was looking atWodgina.
Sources close to Mineral Resources havedismissed suggestions that Wesfarmers is a suitor, but others say that thecompany has shown interest.
Wesfarmers has declined to comment.
The structure of the Wodgina sale of 49 percent of the business is said to be unusual and most of the prospectivecorporate buyers here are not thought to be in the mix due for this reason.
The company is selling some of the ore bodyand retaining the processing plant with potential the buyer of the ore bodycharged a fee to process their ore, according to sources.
For this reason, the buyer, some think, couldquite likely be a party eager to secure the material.
Wesfarmers has a chemicals, energy andfertilisers division that manufactures and supplies ammonia, ammonium nitrateand industrial chemicals to the resource and industrial sectors.
It also makes and distributes chemicals forthe Western Australian agricultural sector.
Some have questioned whether a deal unfoldsbetween the chemicals arm of Incitec Pivot and Wesfarmers Chemicals or Orica,with the three businesses all said to have strong synergies.
Other suitors of Wodgina are thought to beleading lithium producer Shangdong Ruifu, among others from Asia, includingSumitomo, Mitsui, Gangfeng and Tianqi Lithium.
Its overall value is thought to be about$3.5bn.
https://www.theaustralian.com.au/...wesfarmers.../%203cac2346ca4e96743a1695f38a8a625e
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