Peter Ker
The world’s biggest lithium producer will consider mergers and acquisitions on top of an expansion of its Australian lithium mine, as it seeks to supply what it believes will be strong growth in lithium-ion batteries over the next five years.
US company Albemarle predicted over the weekend that demand for lithium-ion batteries would rise 8 per cent per year for the next five years, fuelling demand for the soft, light metal that is sourced from hard rock spodumene in Australia and brine extraction in the Americas.
Albemarle used the same event to announce anexpansion ofthe Greenbushes spodumene mine in Western Australia, which it owns in partnership with Chinese company Tianqi.
Greenbushes is already the world’s largest and highest-grade spodumene mine, and the expansion will more than double annual production capacity from 80,000 tonnes of lithium carbonate equivalent to more than 160,000 tonnes per year, with Albemarle having rights to 50 per cent of the mine’s output.
The prospect of an expansion at Greenbushes has recently been viewed as a negative for the flock of lithium juniors that have sprung up on the ASX in recent years, amid perceptions that lithium demand would only be strong enough for a handful of lithium aspirants to survive the transition to becoming profitable exporters.
But Albemarle said it would also consider growing its lithium footprint via mergers and acquisitions, in comments that could put several ASX-listed stocks in the spotlight.
Albemarle’s chief financial officer Scott Tozier said the company’s balance sheet was now in a condition that could handle another acquisition.
‘‘It is important we invest for growth ... we now have a balance sheet that is ready to invest in the future of both lithium and refining solutions,’’ he told investors.
‘‘M&A will continue to play a role, but you should expect that we are looking at acquisition targets that support or accelerate our stated strategy.’’
Mr Tozier said acquisitions could be focused in several aspects of the lithium production chain, from processing and conversion assets to new lithium manufacturing technology.
But he said adding ‘‘one or more’’ extra lithium deposits to the company’s portfolio was also a possibility.
‘‘With the tremendous amount of activity and identifying viable resources in the marketplace, there’s the potential for us to buy into one or more of those resources,’’ said Mr Tozier.
Albemarle named several Australian lithium aspirants in a slide that ranked the asset quality of the world’s lithium mines. The ASX-listed companies mentioned in the presentation included Orocobre, Pilbara Minerals, Galaxy Resources, Neometals, Altura, Kidman and even Rio Tinto for its Jadar project in Serbia.
While the rankings were designed to illustrate the superiority of Albemarle’s lithium deposits, they implied the next best combination of scale and grade in spodumene mining would be found in Pilbara’s Pilgangoora development project and the Mount Marion mine owned by Mineral Resources, Neometals and Chinese company Jiangxi Ganfeng.
Both those deposits are in WA, with Pilgangoora expected to be commissioned before Christmas.
In terms of lithium from brine extraction, Albemarle’s presentation suggested that Orocobre’s Olaroz project in Argentina had one of the industry’s best combinations of scale of lithium content.
The references come after a tough few months for several ASX-listed lithium miners, whose shares have slipped on the back of sliding Chinese lithium prices and the attention of short sellers
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