Lithium in 2023: M&A, takeovers and government interventionThe trials and tribulations of the lithium industry in 2023.
Nicholas Boyd-MathewsChief Investment OfficerEden Asset Management
Western Australia and the James Bay region of Quebec are two of the world's premier lithium mining jurisdictions. Both regions are known for their abundant lithium resources, sound ESG practices, and reduced risk for investors. In contrast, 2023 has highlighted the risks of developing nations and lower-quality mining jurisdictions. Many international lithium projects in developing countries have faced challenges this year, due to factors such as political instability, regulatory uncertainty, and environmental concerns. This highlights the importance of mining in a stable and well-regulated jurisdiction.
One of the biggest stories has been the takeover of Liontown Resources (ASX: LTR) by Albemarle. Albemarle is the world's largest lithium producer, and its $6.6 billion offer for Liontown will give it a major presence in Western Australia. Liontown owns the Kathleen Valley lithium project, which is one of the largest and highest-grade lithium projects in the world.This is the third offer from Albemarle, increasing each time as the board of Liontown has rejected each prior offer. The board has now supported this bid and expects it to complete. Well, they did, until Gina Rinehart entered the equation. As of today, Gina has accumulated a 16.69% stake in the budding lithium developer. Watch this space!
Another major deal was the merger of Allkem (ASX: AKE) and Livent (NYSE: LTHM). Allkem is a Western Australian lithium producer, while Livent is an American lithium producer. The merged company will be one of the largest in the world, with assets across Western Australia, Canada, South America, and Europe.In addition to these major deals, there has also been a lot of activity from smaller lithium companies in Western Australia. For example, Develop Global has acquired Essential Metals, and SQM has made a takeover offer for Azure Minerals.There has been significant investment from majors into higher risk, earlier stage projects. This is evident in Mineral Resources stake in Delta Lithium, with founder Chris Ellison joining the board as Chairman.
In my 34 years in funds management, I've never seen global majors invest so aggressively in the junior space. We expect this consolidation to continue. Bonza!
