Mineral Resources and Albemarle formalise $1.6b partnership for Wodgina lithium project

Mineral Resources ASX MIN Albemarle partnership deal Wodgina lithium project
Lithium giant Albemarle continues to increase its footprint in Western Australia.

A $1.6 billion partnership between Mineral Resources (ASX: MIN) and global lithium producer Albemarle Corporation over the Wodgina hard rock lithium project in Western Australia has been formalised with the execution of a sales agreement.

The two companies entered into a binding agreement on Friday in relation to the sale of a 50% interest in Wodgina and the formation of a 50:50 joint venture for the exploration, development, mining, processing and production of lithium and other minerals (excluding iron ore and tantalum) from the project area.

The centrepiece will be the construction of the state’s newest battery-grade lithium hydroxide plant.

Under the terms of the agreement, Mineral Resources will construct and fund the Wodgina project facilities including fixed infrastructure, utility and processing plants, as well as crushing services (under a build-own-operate model).

The company will also provide operations and maintenance services for the accommodation camp and airport, and mine-to-port haulage and ship loading for transport of product from Wodgina.

Future lithium hydroxide plants will be funded, designed, built and operated by Mineral Resources and US-based Albermarle.

Two-stage development

The Wodgina joint venture is expected to produce up to 750,000 tonnes per annum of 6% spodumene concentrate initially for sale and ultimately as feedstock for the planned $1 billion refinery, to be constructed in two stages using Albermarle’s proprietary plant design.

The first stage, once fully commissioned, is expected to produce at least 50,000tpa of lithium hydroxide with construction to commence as soon as licences and approvals are in place.

The second stage will convert the remaining volume of spodumene concentrate to lithium hydroxide at which point the plant is expected to be producing at least 100,000tpa of lithium hydroxide.

Exact volumes will be subject to prevailing lithium market conditions at the time.

Strong global interest

Last month, Mineral Resources said the exclusive agreement with Albermarle followed a global sale process in relation to the Wodgina project, which resulted in “strong interest” from global players in the battery minerals and chemicals value chain.

“We have been able to reach agreement with Albemarle on the basis on which we will negotiate exclusively regarding a potential joint venture at Wodgina,” managing director Chris Ellison said at the time.

“I am confident that we can produce and supply high-quality, competitively-priced lithium into the market to meet increasing global requirements for these important energy storage products.”

Lithium wave

The joint venture’s new lithium plant, to be based at Kemerton, near Bunbury, is part of a current lithium wave dominating WA’s minerals scene.

The state already has four lithium mines in production, with another three set to come online in the future to service growing demand from the electric vehicle and energy storage system industries.

In 2017, Kidman Resources (ASX: KDR) and South American company Sociedad Quimica y Minera de Chile established the Mt Holland 50:50 joint venture for a spodumene mine and lithium concentrator development near Southern Cross in WA.

A scoping study completed in October confirmed the development could be a a low cost, integrated producer with a projected annual production of more than 45,000t battery-grade lithium hydroxide.

In June, Neometals (ASX: NMT) entered into a two-year option agreement with the City of Kalgoorlie-Boulder over a 40 hectare site in a new industrial estate to house a proposed lithium refinery with an initial 10,000tpa production capacity.

Lithium concentrate feed would come from the company’s future share of offtake from the nearby Mt Marion lithium project, in which it shares ownership with Mineral Resources and Ganfeng Lithium Co Ltd.

Closer to home, Chinese company Tianqi Lithium Corporation, via its subsidiary Tianqi Lithium Australia, last year approved a $300 million expansion of “the biggest lithium hydroxide plant in the world” at Kwinana, even before stage one had been completed.

The plant will process spodumene concentrate from the Greenbushes mine in WA to produce 24,000tpa of lithium hydroxide for the manufacture of lithium batteries.

Construction of stage one began in October 2016 with a stage two expansion designed to double the production of battery-grade lithium hydroxide to 48,000t a year.

Maximising opportunities

Last week, the Federal Government released a report into maximising the economic opportunities arising from Australia’s booming lithium sector.

The report identifies areas of opportunity for investment, partners and technologies required to develop lithium capability ahead of other global participants.

It follows criticism earlier this year by WA’s chief scientist Professor Peter Klinken that it would be “bordering on tragic” for Australia to not take advantage of its rich lithium resources.

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