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Albemarle, the mining major, has walked out on a $4.16-billion bid for Australian lithium producer Liontown Resources.
Per the Australian Financial Review, Albemarle cited “growing complexities” surrounding the deal as the reason for its withdrawal.
Reuters noted in a report that the recent stake build by mining billionaire Gina Rinehart could be one of those complexities. Rinehart acquired 19.9% in Liontown over the past few months. The stake is large enough to allow her to block the Albemarle bid.
The Financial Times reported that Rinehart had given no reason for the stake build but it had disrupted Albemarle’s due diligence and had cast a question mark over its chances of securing enough shareholder votes for the acquisition.
Liontown Resources is the owner of the Kathleen Valley lithium project, which is seen as one of the biggest prospective lithium projects globally. The company itself describes it as “a Tier-1 battery metals asset with excellent grade and scale in one of the world’s best mining districts.”
Reuters notes that Liontown already has lithium supply deals inked with Tesla, Ford, and LG Energy.
Following the pullout of Albemarle, Liontown halted trading in its shares to raise funding for its flagship project. The company recently raised the cost estimate for Kathleen Valley by 6% and said it was in talks with prospective lenders.
Lithium has become one of the hottest commodities on global markets thanks to the energy transition push, of which electric vehicles are a key element. Demand for the metal is seen rising substantially, with some analysts even forecasting a shortage looming on the horizon.
Yet lithium prices have been subdued for most of this year because of weaker-than-expected demand from China—the world’s largest EV market and lithium processor. However, declining inventories could prompt a reversal in the current price trends, according to Chinese analysts.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com