Lithium miners plead ‘foreign entity’ case to US over China...

Lithium miners plead ‘foreign entity’ case to US over China links
Peter KerMay 20, 2024 – 5.36pm

Albemarle and Tianqi are set to appeal to the US government to exempt their huge Greenbushes mine from being designated under the foreign entity of concern rules. normal

Senior lawyers acting for Australian lithium miners believe all lithium produced at Greenbushes and Mt Marion would be deemed ineligible under the literal interpretation of the final US government rules published on May 6.

Benchmark Mineral Intelligence analyst Cameron Perks said the final rules were open to interpretation, but he also believed the mines would be labelled foreign entities of concern by the US.

Mt Marion is owned by Australian registered company Reed Industrial Minerals, which is 50 per cent owned by a subsidiary of ASX-listed Mineral Resources and 50 per cent owned by a Hong Kong-registered subsidiary of Ganfeng called GFL International.

Mineral Resources director of corporate strategy and growth Tim Picton said his company would be disappointed if all product from Mt Marion were flagged because of Ganfeng’s Chinese origins.

“As an Australian company selling lithium that we have mined from an Australian mine, we believe our share of Mt Marion offtake to be compliant. The alternative would be completely counter-intuitive and achieve the opposite of the IRA’s stated objectives,” he said.

“We are awaiting further guidance on the process for certification.”

Australia’s biggest and best lithium mine, Greenbushes, is in effect 26 per cent-owned by China’s Tianqi, 49 per cent-owned by American company Albemarle and 24 per cent-owned by Australia’s IGO.

The corporate structure has the mine directly held by Australian registered company Windfield Holdings, which is 51 per cent-owned by United Kingdom registered company Tianqi Lithium Energy Australia, which itself is 51 per cent-owned by China’s Tianqi Lithium Corporation.

Albemarle and Tianqi are understood to be preparing to appeal to the US government for Greenbushes to win exemption from the literal interpretation of the foreign entity of concern rules.

A clause in the May 6 rules about foreign subsidiaries of Chinese companies may help their case.

The relevant clause implied that Australian or British registered subsidiaries of Chinese companies may escape foreign entity of concern status.

“When an entity is a FEOC due to it being ‘subject to the jurisdiction’ of a covered nation, subsidiaries of the FEOC are not automatically considered to be FEOCs themselves based solely on their parent being a covered nation jurisdictional entity,” said the DOE in an update to the federal register on May 6.

“United States or third-party country subsidiaries of entities that are headquartered within a covered nation do not necessarily pose the same risk to the battery supply chain as subsidiaries that are FEOCs by virtue of the government of a covered nation holding, directly or indirectly, 25 per cent or more of the equity interests, board seats, or voting rights of the subsidiary.”

A spokesman for Albemarle said: “We are reviewing the final guidance to understand how it applies to our global operations.”

Mineral Resources’ Wodgina and Bald Hill lithium mines should escape foreign entity of concern status if they send their product to non-Chinese destinations for processing, given there is no Chinese ownership in those mines.

Pilbara Minerals sends the majority of its Australian lithium to China for processing and that material would be deemed as from a foreign entity of concern under the US rules.

But Pilbara and its partner POSCO have newly completed construction of a lithium hydroxide processing plant in South Korea, and that material should be eligible for US subsidies.

Liontown Resources’ Kathleen Valley mine is also being built with almost no participation from Chinese investors nor lenders.