Albemarle will pay smaller price for bigger stake in Wodgina jv

Albemarle Corp has agreed to take a larger stake in a joint venture with Australian lithium miner Mineral Resources for a lower price than was agreed earlier, reflecting weaker lithium markets.

Albemarle will pay $820 million in cash to form the 60-40 joint venture to develop Mineral Resources’ Wodgina lithium hard rock mine while giving Mineral Resources a stake in Albemarle’s planned Kemerton lithium hydroxide works, having agreed at the end of the fourth quarter of last year to pay $1.15 billion for a 50% stake in the project.

Albemarle will manage the marketing and sales of spodumene concentrate from Wodgina and future lithium hydroxide output from Kemerton, which will have two production lines of 25,000 tonnes per year.

The development of Kemerton will cost an expected $1.2 billion. Commissioning will start in the first half of 2021; future expansion will depend on market and forecast demand, Albemarle said.

This new agreement comes at a time of lower lithium hydroxide prices due to oversupply. But it will help Albemarle to de-risk its current lithium chemical production from Chilean brine, from which it produces lithium chemicals.

Fastmarkets assessed the lithium hydroxide monohydrate, 56.5% LiOH.H2O min, battery-grade spot price at $12-14 per kg, cif China, Japan and Korea, on Thursday August 1, down by 18.75% from $15-17 per kg on January 3.

“The changes to the transaction accelerate the joint venture’s ability to bring lithium hydroxide to the market to serve the commitments made to Albemarle’s customers through our long term agreements,” Albemarle chief executive officer Luke Kissam said.

“This also allows Albemarle to reduce its capital spend for the foreseeable future while preserving greater flexibility and options for any such capacity additions in the future,” he added.