Gina Rinehart’s $500m raid on Liontown gatecrashes $6.6b takeover

Australia’s richest woman Gina Rinehart has plunged half a billion dollars into lithium miner Liontown Resources, indicating she wants a seat on the board just as US giant Albemarle Corporation prepares to inspect the books to shore up its $6.6 billion takeover bid.

Rinehart’s company Hancock Prospecting confirmed recent raids on Liontown’s shares had given it a critical 7.72 per cent stake in the lithium prospector that is developing a lucrative high quality hard-rock deposit in Kathleen Valley, in the middle of Western Australia.

Rinehart gatecrashing Albemarle’s takeover party ups the ante in a global battle to control scarce supplies of lithium, a key component in modern home and grid batteries used to store the renewable energy generated from wind and solar or to power electric cars.

“This shareholding provides Hancock with a strategic stake in Liontown, giving Liontown the opportunity to leverage Hancock’s expertise where it is of value to support the project’s development and subsequent operations,” her company said in statement.

Vehicle manufacturers across China, Europe and the US are scrambling to secure supplies of the material as they pivot to making all-electric transport, a shift that is fuelling mining explorers and putting small operators like Liontown supplying the raw material in the sights of global mining giants. Liontown’s board this week opened its books to Albemarle after the New York-listed chemicals giant lobbed a $6.6 billion bid at $3 a share for the mining minnow.

Albemarle already holds a 2.2 per cent stake in the miner through its subsidiary RT Lithium. Its latest bid is its third in five months. It has made two previous non-binding proposals - one in March at $2.35 a share, and the other last October at $2.20 a share. Liontown and Albemarle agreed to terms around non-disclosure and exclusivity arrangements on Monday, allowing the chemical giant to begin due diligence to support its bid. “It is expected that Albemarle’s due diligence will take approximately four weeks. That due diligence will be on an exclusive basis, subject to customary fiduciary exceptions,” Liontown said.

Liontown’s change in substantial holding form lodged with the ASX on Tuesday morning shows Rinehart has accumulated some 169,914,764 shares in the lithium miner, giving her stake a value worth more than $511 million at the stock’s closing price on Monday of $3.01.

Rinehart has indicated she will flex her muscles on the lithium player’s future in a shot across Albemarle’s bows, and may seek a presence on the junior miner’s board.

“Hancock can contribute to Liontown’s future direction alongside other Liontown shareholders, including in relation to potential investment opportunities for downstream value add in Western Australia,” her company said. “In the future, Hancock may also seek a position on Liontown’s board.”

Rinehart’s company has a half share in the Pilbara’s lucrative Hope Downs iron ore mines, which is managed by global giant Rio Tinto. Rinehart is embroiled in a legal battle with the descendants of two business partners of her father, Lang Hancock, who want to claw back billions of dollars in iron ore royalties from Hope Downs. The Liontown takeover bid and subsequent trading activity is proving a boon for the lithium miner’s faithful early shareholders, who are being delivered stunning returns for their investment, particularly if they bought in when the company listed on the ASX in 2018 at 3¢ a share. Liontown’s register is dominated by its chairman, Tim Goyder, who owns a 15 per cent stake in the company. Another 20 per cent is reportedly in the hands of investors closely aligned to Goyder.

From today's SMH/Age