Good News & Bad News, page-16578

MinRes puts $1.3b price tag on Pilbaralithium hydroxide plant

Chris Ellison’s Mineral Resourceshas shed light on its lithium growth plans, as speculation continues about apotential spin-off of company assets used to produce the key battery making ingredient.

MinRessays it can build a 50,000 tonne a year lithium hydroxide plant in WesternAustralia for $US650 million ($1.3 billion).

The Chinese designed and fabricated plant would be built at theWodgina lithium mine in the Pilbara, where MinRes and its partner Albemarle areramping up production to meet soaring demand from car and battery makers.

MinRestold analysts on an investor site tour of Wodgina that it expects to finalisethe revised terms of its joint venture with heavyweight battery chemicals partnerAlbemarle within the next six weeks.

GoldmanSachs lifted the lid on some of the MinRes plans in a note to clients afterthis week’s investor briefing and Wodgina site visit.

Albemarleboss Kent Masters described Mr Ellison as a colourful character during a visitto WA last month, and moved to clarify what his New York Stock Exchange-listedcompany is doing in its own right to boost lithium hydroxide capacity, asopposed to through the MARBL joint venture entity.

MrEllison is pushing hard for Albemarle to agree on building the hydroxide plantat Wodgina, but is yet to get a commitment after Albemarle suffered costblow-outs and delays with a similar plant built to process lithium from theGreenbushes mine in WA’s south-west.

In themeantime, MinRes is likely to send spodumene to Albemarle’s hydroxide plants inChina.

Possiblegovernment funding

MinResfavours building the hydroxide plant at the Wodgina mine rather than at PortHedland and believes it might be eligible for critical minerals funding fromthe Australian government.

TheGoldman Sach analysts said MinRes had noted Ganfeng could build a 50,000tonne-a-year plant in China for $US230 million, whereas Albemarle’s similarcapacity plant at Chengdu cost $US600 million.

China’sGanfeng and MinRes are partners in the Mt Marion lithium mine in WA.

MinResis targeting 120,000 tonnes a year of lithium carbonate equivalent (LCE)production from the Wodgina and Mt Marion mines in the next five years, butcould opt for a $10 billion-plus demerger of the business while retaining itsmining services and iron ore divisions.

Potentiallithium spin-off

TheAustralian Financial Review revealed on September 8 that MinRes andits JPMorgan bankers were looking at spin-off structures and a potential USlisting for the lithium business.

MinRestold analysts the ramp up of Wodgina was going well and that trains 1 to 3might be able to operate at 25 per cent above nameplate capacity and produce900,000-950,000 tonnes a year of spodumene for conversion into hydroxide.

MinResand Albemarle are considering building a fourth train at the mine.

MrMasters has said the MinRes lithium business could be on Albemarle’s investmentand acquisition radar at the right price, but baulked at committing to ahydroxide plant at Wodgina after his recent tour of lithium assets in WA.

“We’lllook at all the pieces of geopolitical benefits in Australia, but it’s going toprobably cost more than what we could do somewhere else,” he said.

Greenlight for Mt Holland

Theinsight into the MinRes plans came as WA’s environmental watchdog gave a greenlight to revised plans for the Mt Holland lithium mine andassociated hydroxide plant being developed under a partnership between Wesfarmers and global lithium giant Sociedad Quimica y Minera de Chile (SQM).

WAEnvironmental Protection Authority chairman Matthew Tonts noted the importanceof lithium as a critical mineral for future renewable power generation inrecommending the state government approve changes to the Wesfarmers-SQM lithiumproject.

Themine plan now involves the clearing of more than 440 hectares of nativevegetation, incorporates a solar power plant and changes to waste disposal.

Wesfarmersexpects to start producing hydroxide from a plant under construction atKwinana, south of Perth, in the second half of calendar 2024.