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Albemarle evaluating other lithium acquisitions

kemerton, lithium, albemarle, WA

US lithium giant Albemarle has indicated its intention to look for other lithium acquisitions beyond Liontown Resources, which the company unsuccessfully launched a bid for in March.

“We continue to evaluate a broad range of inorganic opportunities to expand capacity,” Albemarle chief financial officer, Scott Tozier, told the market in an earnings call.

“Our primary targets (for inorganic growth) are in three areas: lithium resources, extraction and processing technology, and battery recycling.”

In March this year, Albemarle attempted exactly that, making a $5.2 billion takeover offer of Australian lithium company Liontown Resources.

But Liontown was less eager to come to the table. After review, the board unanimously rejected the offer on the grounds that it substantially undervalued the company.

Liontown cited its Kathleen Valley lithium project, about which the company said there are few other lithium assets of comparable “scale, quality and mine life”.  The company forecasts the Kathleen Valley project to become Australia’s biggest lithium mine.

“We intend to maintain our track record of a disciplined mergers and acquisitions approach that improves returns and preserves our financial flexibility with our investment grade credit rating,” Tozier said in the earnings call.

“In line with that strategy, and as previously disclosed, Albemarle submitted an indicative proposal to acquire Liontown Resources, a development stage spodumene resource in Australia.

“To date, the Liontown Board is not meaningfully engaged in progressing the transaction, we will provide updates if and when we have more information.”

Liontown isn’t the only player in the lithium game in Australia. Core Lithium has the Finnis lithium project in NT, and ASX-newcomer EverGreen Lithium owns the Bynoe lithium project, just 1.2km away from the Finnis mine.

As Australia is the biggest producer of lithium in the world, there’s no shortage of potential takeover targets for Albemarle.

But beyond mergers, the company has indicated that its primary aim remains organic growth.

“Our primary use of capital remains organic growth projects to leverage our low-cost resources in Australia and the Americas,” Tozier said.

True to form, just last week Albemarle announced its decision to build two additional processing trains at its Kemerton lithium hydroxide plant in WA, making it the largest investor in downstream lithium processing in Australia.

The expansion will increase Kemerton’s production capacity by 50 kilo-tonnes per annum, doubling total production to 100 kilo-tonnes per annum, making Albemarle the largest producer of lithium in Australia.

The increase in production capacity is enough to support the production of batteries for over two million electric vehicles each year.

“Kemerton is a world-class facility,” Albemarle president of energy storage, Eric Norris, said.

“We’re proud to be making another significant investment in downstream processing in Australia.”

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