Lithium King Bets Big on Demand Shift With Australia Mine Deal – by Laura Millan Lombrana (Bloomberg News – November 21, 2018)

Albemarle Corp. agreed to pay $1.15 billion for a stake in a giant lithium mine in Australia, guaranteeing the biggest producer of the mineral greater access to a more refined form of the raw material that’s increasingly being used in electric-car batteries.

The Charlotte, North Carolina-based company will take a 50 percent stake in a potential joint venture with Mineral Resources Ltd. that will own and operate the Wodgina hard-rock lithium deposit with a mine life of over three decades. Under the deal, Albemarle will manage the marketing and sales of lithium hydroxide, which fetches a higher price than lithium carbonate. Mineral Resources rose as much as 33 percent, the most since July 2006, in Sydney trading Thursday.

Albemarle plans to expand output in Australia to gain from rising demand for lithium hydroxide, also known as spodumene. The mineral works better with cathodes containing higher levels of nickel, helping electric cars go further on a single charge. The deal signals the company’s swift reaction toward shifting demand that has previously been concentrated mostly on lithium carbonate.

“It makes sense for the company to diversify its spodumene assets to ensure growth in their hydroxide supply chain,” Andrew Miller, a senior analyst at Benchmark Mineral Intelligence said by email. “Those producing hydroxide from spodumene will only be competitive on cost if they integrate raw material and chemical production, and this is a position Albemarle is clearly trying to strengthen through the Mineral Resources JV.”

Total demand for lithium is expected to almost triple through 2025 as manufacturers such as Tesla Inc. ramp up electric vehicle production. Albemarle announced earlier this month it was halting a project to increase output capacity in its operations in Chile beyond 2021.

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