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Gina Rinehart made her billions from heavy metals. Australia’s richest person seeks one of the lightest, lithium. Her privately held iron ore miner Hancock Prospecting has built a 12.4 per cent stake in locally-listed Liontown Resources. She could block a proposed A$6.6bn ($4.3bn) takeover by Albemarle of the US.
Lithium carbonate prices may have crashed, down 68 per cent year on year. Demand for this key battery input will not do so in the long term. Electric vehicles depend on cells using lithium. Australia offers an important supply.
Rinehart has a reported worth of more than A$34bn. Hancock has plenty of firepower of its own. It last reported more than A$17bn of net cash with billions more piling up annually. Liontown, worth a third of that, sits on Australia’s fifth-largest lithium resource.
Rinehart set her cap at Liontown months ago. Keen to diversify from iron ore, she has been accumulating shares since early April, according to local filings. Her in-price sits below Albemarle’s latest agreed offer of A$3.00 a share.
Rinehart’s stake could yet climb over the current A$800mn. Under deal terms so far, the Albemarle takeover would require 75 per cent approval from shareholders. A vote will not happen until the board recommends the deal. It may not occur until next year, if at all.
Albemarle’s margin for victory reduces every time Hancock increases its stake. This occurred five times last month alone. If it goes over 20 per cent, a mandatory bid would be required. Team Rinehart has intimated it will not pay more than A$3.00 a share. Albemarle could raise its offer to tempt Reinhart to sell. Or perhaps it can work with Hancock as a minority investor.
That is possible. Lithium projects, given the mining and processing skills required, do suit partnerships. Albemarle has one at Wodgina, a larger local lithium project.
Either way, Liontown shareholders have nothing to lose as two industry heavyweights vie for their favour.
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