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Albemarle signs exclusivity agreement with Mineral Resources for 50/50 lithium JV in W. Australia; $1.15B deal

Albemarle Corporation, a leader in the global specialty chemicals industry, signed an Exclusivity Agreement (Agreement) with Mineral Resources Limited in relation to the potential creation of a 50/50 joint venture (JV) to own and operate the Wodgina hard rock lithium mine and ultimately develop an integrated lithium hydroxide operation at the resource site.

Wodgina, located in the Pilbara region of Western Australia, is a world-class hard rock lithium deposit, with an estimated mine life of more than 30 years.

The proposed JV, which remains subject to negotiation of definitive documents, would combine Albemarle’s lithium production and marketing expertise with Mineral Resources Limited’s (MRL) leading regional presence and mining capabilities. Under the terms of the Agreement, Albemarle would manage the marketing and sales of lithium hydroxide produced by the JV via Albemarle’s long-term agreement strategy.

The purchase price for Albemarle’s 50% interest in the JV would be US$1.15 billion, which Albemarle expects to fund with available cash and new credit facilities. It is expected that the transaction will be accretive to Albemarle’s earnings.

The agreement includes the following key provisions and commercial terms: Albemarle would acquire a 50% interest in all mineral rights within the Wodgina tenements, other than iron ore (which will be retained exclusively by MRL) and tantalum (which remain held by a third party), all fixed infrastructure and utility assets, the spodumene concentration plant and the mobile mining equipment.

The parties would jointly manage the JV, through a company to be owned in equal shares by the parties.

After construction and ramp-up of the spodumene concentration plant, the JV is expected to produce up to 750 ktpa of 6% spodumene concentrate from Wodgina which is planned to be used as feedstock to the future lithium hydroxide plant. The parties would jointly fund, design, build and operate the lithium hydroxide plant in stages at Wodgina utilizing Albemarle’s core design.

The first stage, once fully commissioned, is expected to produce at least 50 ktpa of battery-grade lithium hydroxide. Construction would commence as soon as the necessary licenses and approvals are in place.

The second stage is expected to convert the remaining volume of spodumene concentrate to battery-grade lithium hydroxide (subject to prevailing lithium market conditions at the time supporting this development), at which point the plant is expected to be producing at least 100 ktpa of lithium hydroxide.

The exclusivity period extends to 14 December 2018 (or such later period as the parties mutually agree) for the parties to agree upon and execute binding definitive documents.

While the above terms have been commercially agreed and the agreement is binding in respect to the exclusivity period, the parties will only become legally bound to enter into the proposed joint venture upon execution of definitive documents and board approval by the parties. Completion of the transaction will be subject to satisfaction of conditions of an administrative nature, any regulatory approvals and any third party consents.

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