Australian Miner Gains Control Over US Lithium Giant’s China Assets

Albemarle to increase share of Australian mining assets

Albemarle Corporation spokesman Marcelo Valdebenito holds a bottle of processed lithium carbonate at a lithium mine in Salar de Atacama, Chile on Aug. 24, 2022. John Moore/Getty Images

U.S. lithium giant Albemarle will deepen control of Australian lithium mining assets after revamping its joint venture with Mineral Resources (MinRes).

In turn, the Australian Mineral Resources will also gain partial control of two Chinese mining plants operated by Albemarle.

In the new deal announced on Feb. 22, Albemarle will initially deepen control over two spodumene conversion trains in Kemerton, Western Australia, from 60 to 85 percent.

Spodumene is in high demand for conversion to lithium which is used in the creation of lithium-ion batteries—now a must-have item amid the global push for net-zero. Lithium batteries are used in electric vehicles, smartphones, and large rechargeable batteries.

“Our Australian lithium assets are core to Albemarle’s strategy to build a globally diversified portfolio of best-in-class assets and resources,” said Kent Masters, CEO of the Charlotte-based Albemarle, in a statement.

“Inherent to that strategy is managing our global portfolio to maximize growth optionality and maintain a leading position in a dynamic, growing market.”

The Kemerton facility is connected to the Greenbushes mine, one of the world’s largest sources of lithium. Australia currently supplies around half of the world’s lithium and is a top destination for some of the largest miners globally, including China’s Tianqi and Chile’s SQM.

Australian Company Gets Chinese Winfall

At the same time, MinRes will up its stake in the jointly owned Wodgina Lithium Mine Project from 40 to 50 percent.

“MinRes is proud to operate in Western Australia, a jurisdiction that leads the world in ethical mining practices and is backed by governments focused on growing the battery minerals supply chain,” said Managing Director Chris Ellison.

“We also continue to study options to invest in capacity for future downstream lithium production in Australia,” he added.

Meanwhile, in China, the Australian firm will receive half the ownership of Albemarle’s Qinzhou and Meishan plants after agreeing to pay $970 million (US$660 million).

Qinzhou has a capacity of 25,000 tonnes per annum and will be modified to be able to convert spodumene from Wodgina, while Meishan has a future capacity of 50,000 tonnes per annum.

Both will be ready in 2024. However, the deals are subject to Chinese and Australian regulatory approval.

The Supply Chain Headache

Lithium and rare earth supply chains continue to be a headache for political and business leaders.

While the mining of lithium is diversified, the actual processing activity is concentrated in China, with many miners (like Albemarle and Mineral Resources) shipping extracted minerals overseas instead of processing them locally.

China is estimated to control around 44 percent of lithium refining globally and 70 percent of battery cell production, in statistics from Benchmark Mineral Intelligence.

This advantage was gained steadily over the decades through low-cost labour and relatively lax environmental standards that together feed into cheaper processing costs compared to the West where mining firms have simply closed shop altogether.

A recent report from Li-Bridge, “Building a Robust and Resilient U.S. Lithium Supply Chain,” said the situation posed a national and economic security risk to the United States.

“The U.S. military today does not have direct, domestic access to the most advanced lithium batters and chemistries to power its troops, vehicles, bases, and weapons systems. Foreign countries, including some that are potential adversaries, also control the upstream and midstream, supply chain for those batteries,” the report read.

The situation has compelled U.S. and Australian leaders to push hard to develop alternate processing streams for lithium and rare earths.