Wesfarmers’ $776m play for Kidman a major boon for tech metals sector

Wesfarmers’ $776m play for Kidman a major boon for tech metals sector

It is becoming evident that gaining a foothold in the electric vehicles and batteries market is becoming a core priority for Perth-based conglomerate Wesfarmers (ASX: WES). That should put some confidence in both the technology metals sector and the juniors already playing in the space.


It is becoming evident that gaining a foothold in the electric vehicles and batteries market is becoming a core priority for Perth-based conglomerate Wesfarmers (ASX: WES). That should put some confidence in both the technology metals sector and the juniors already playing in the space.

When Wesfarmers announced this week that it had secured a friendly agreement to buy aspiring lithium miner Kidman Resources (ASX: KDR) for an all-cash consideration of $776 million (or $1.90 per share), the top five ASX200 movers on the Australian bourse lit up green with those in the tech metals space.

Leading that charge was Pilbara Minerals (ASX: PLS), owner of the Pilgangoora lithium mine in the Pilbara.

This is Wesfarmers’ second attempt in just a handful of weeks in entering the sector, after having revealed in late March ambitions of buying another ASX-listed company, rare earths-focused Lynas Corporation (ASX: LYC) in a $1.5 billion bid.

That was promptly knocked back by Lynas, which argued that the $2.25 a share offer was a significant undervaluation of its business, given its unique position as a major rare earths miner and processor that is located outside of China.

But according to media reports this week, the conglomerate’s managing director, Rob Scott, Wesfarmers considers the offer very much alive and still on the table.

Regardless of Wesfarmers’ success with either of these deals, the mere fact that a company of its scale is trying to enter the renewable technologies game – and is willing to pay some significant premiums to get there – should restore some confidence in those investors who have seen their tech metals portfolios lagging over the past year and have questioned the long-term viability of the sector.

That’s a sentiment shared by Stephen Biggins, who serves as managing director of Core Lithium (ASX: CXO), which is currently building the Northern Territory’s first lithium mine – the Finniss lithium operation – that is set to come online next year.

“The huge premium offered by Wesfarmers in their bid proposal for Kidman highlights that some of Australia’s most sophisticated investors understand the deep value currently offered in the Australian lithium industry and the significance and international interest in development-ready lithium projects to the global battery and EV industry,” he said.

Wesfarmers has eyed Kidman for its flagship Mt Holland lithium project in South Australia, which is being developed under a 50-50 joint interest with Chile-based lithium major SQM.

Commenting on the Kidman acquisition offer, Mr Scott said it would underpin the development of Mt Holland and also deliver Kidman shareholders an attractive premium and certain cash return.

“The acquisition of Kidman provides an opportunity to invest in and develop a large-scale, long-life and high-grade lithium hydroxide project in Western Australia,” he said.

“It also creates a unique partnership with SQM, a global leader in the lithium industry with a long operating history and deep market knowledge.”

The Kidman board has told its shareholder base that the Wesfarmers offer is in their best interests and it would work with the bidder towards finalising a binding transaction.

The offer also has backing from major Kidman shareholders.

Aeris Resources provides drilling update for Torrens

Aeris Resources provides drilling update for Torrens

Australian Mines to present at Electric Vehicles Battery Tech conference in Germany

Australian Mines to present at Electric Vehicles Battery Tech conference in Germany