Mineral Resources revises arrangements with Albemarle
Following the announcement of the binding Wodgina Asset Sale and Share Subscription Agreement on 14 December 2018, Mineral Resources (ASX: MIN) and Albemarle Corporation (NYSE: ALB) have developed a strong working relationship and have together been exploring ways to further increase alignment between the parties while leveraging each company’s respective strengths and position in the global lithium industry.
As such, MRL is pleased to announce that it has today entered into revised arrangements with Albemarle which provide MRL with an opportunity to participate in the lithium hydroxide market on an accelerated basis while preserving optionality for future capacity expansions.
Under the revised arrangements:
· MRL will increase the interest in the Wodgina Lithium Project to be sold to Albemarle from 50% to 60% and Albemarle and MRL will form a 60:40 joint venture to operate the Wodgina Lithium Mine and battery grade lithium hydroxide production facilities (Joint Venture); and
· Albemarle will pay US$820 million in cash at closing and transfer a 40% interest in the first two 25 ktpa lithium hydroxide conversion units currently being built by Albemarle in Kemerton, near Bunbury in Western Australia (Kemerton Modules).
The Kemerton Modules, when complete, will be capable of processing spodumene produced at Wodgina. The Joint Venture will assess the optimal use of the Kemerton Modules and processing of Wodgina spodumene, which may include offshore processing and the substitution of other feedstock for the Kemerton Modules.
The parties retain the option to develop new downstream processing facilities at Wodgina or another location, should market conditions be supportive. The revised arrangements are contained in an agreement for the sale of the 40% interest in the Kemerton Modules (Kemerton Sale Agreement) and an Amendment Deed to the Wodgina Sale Agreement (Amendment Deed), which together comprise the Transaction Documents, as further summarised below.
The Transaction Documents remain subject to regulatory approvals (including Foreign Investment Review Board (FIRB)), WA Ministerial Consent and the consents of certain third parties. As announced by MRL on 26 July 2019, the China State Administration of Market Regulation (SAMR) has given its approval to completion of the original transaction under the Wodgina Sale Agreement, and the parties will co-operate regarding further SAMR approval requirements (if any) in respect of the revised arrangements set out in the Transaction Documents.
The previously agreed commercial arrangements for the provision of crushing, camp and logistics services at Wodgina by the MRL Group to the Joint Venture remain in place. The key terms of the Transaction Documents are set out in the link below.
Managing Director of MRL, Mr Chris Ellison said: “The revised arrangements between MRL and Albemarle are a testament to the strong working relationship and open dialogue we have been able to develop over the past seven months as we have worked to implement our proposed joint venture.
"The revised structure preserves the key features of the original transaction while reducing the overall funding requirement for both parties.
"It also provides an opportunity for MRL to participate in the development of the Kemerton lithium hydroxide plant, which will provide MRL with an interest in an operational lithium hydroxide facility sooner than previously planned through the Wodgina development.
"This represents a win-win outcome for both parties. I look forward to continuing our work with Albemarle to achieve financial close in 2019.”
MRL is advised by Macquarie Capital as financial adviser and Gilbert + Tobin as legal adviser in relation to the transaction.