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Mineral Resources sign sale agreement with with Albemarle

Mining News - Published on Mon, 17 Dec 2018

Image Source: Mining Technology
Mineral Resources Limited announced that it has entered into a binding Asset Sale and Share Subscription Agreement with Albemarle Corporation in relation to the sale of a 50% interest in the Wodgina Lithium Project and formation of a 50:50 joint venture that will produce spodumene concentrate and lithium hydroxide. The execution of the Sale Agreement follows the announcement of the signing of an exclusivity agreement and commercially agreed key terms with Albemarle on 21 November 2018 which was the culmination of a global sale process that generated strong interest from a range of global participants in the battery minerals and chemicals value chain.

Transaction overview
Under the Sale Agreement, Albemarle will purchase a 50% interest in certain tenements, assets and related infrastructure, together comprising the Wodgina Lithium Project, and on completion will form a 50:50 unincorporated joint venture with MRL as outlined below:
Key sale terms

1. Purchase price for the Sale Interest of USD 1.15B in cash payable upon completion of the sale of the Sale Interest (subject to certain completion adjustments).

2. Albemarle to acquire a 50% interest in all mineral rights within the Wodgina tenements other than iron ore (which will be retained exclusively by MRL) and tantalum (which remain held by Global Advanced Metals Greenbushes Pty Ltd) certain MRL owned fixed infrastructure and utility assets, the spodumene concentrate plant and the mobile mining equipment.

3. Completion of the sale and formation of the Wodgina JV is subject to conditions precedent relating to regulatory approvals, including Foreign Investments Review Board (FIRB) and Chinese anti-trust approvals (as to which see further below) WA Ministerial Consent and the consents of certain third parties with interests in the underlying tenements, as outlined further under 'Additional Information'.
Key Wodgina JV arrangements

4. Contemporaneous with completion of the sale, the parties will form a 50:50 unincorporated joint venture for the exploration, development, mining, processing and production of lithium and other minerals (other than iron ore and tantalum) from the Wodgina JV area.

5. The parties will jointly manage the Wodgina JV, through a special purpose company to be formed on completion and owned in equal shares by the parties (the Manager).

6. MRL will be solely responsible for constructing and funding the fixed infrastructure, utility and processing plants required to produce 750Ktpa of 6% spodumene concentrate (Project Facilities) with the future lithium hydroxide plants to be jointly funded by both parties as outlined further below.

MRL (or a related corporation) to provide the Wodgina JV, for the life of mine, with crushing services (under a build own operate model), operations and maintenance services for the accommodation camp and airport, and mine to port haulage and ship loading for the transportation of product from Wodgina.
The Wodgina JV is expected to produce up to 750Ktpa of 6% spodumene concentrate from Wodgina, initially for sale and ultimately feedstock for the lithium hydroxide plant (outlined below) once constructed.
As part of the Wodgina JV, the parties will (subject to necessary JV approvals) jointly fund, design, build and operate a battery grade lithium hydroxide plant in two stages at Wodgina. Each stage will be targeted to produce up to 50ktpa of lithium hydroxide (LCE basis). The timing of the second stage will depend on prevailing lithium market conditions.
Albemarle to make its core lithium hydroxide plant designs available to the Wodgina JV under licence.
Following establishment of the Wodgina JV, Albemarle will manage the marketing and sales of spodumene concentrate (prior to the construction of the hydroxide plant) and lithium hydroxide produced by the Wodgina JV.
A Management Committee (consisting of equal numbers of representatives from each party) will be formed to be responsible for providing oversight of the Manager and approving key decisions including business plans and budgets. Decisions of the Management Committee are by simple majority decision (save for certain matters for which a special majority decision is required), so whilst a 50/50 joint venture structure exists, decisions must be unanimous.
The Joint Venture Agreement contains provisions usual for agreements of this type, including certain restrictions on transfers of joint venture interests and deemed sale offers upon the occurrence of a change of control or default of a joint venture participant.

Mr Chris Ellison, Managing Director of MRL, said that "I am extremely pleased we have been able to complete definitive documentation with Albemarle on the sale of a 50% interest in Wodgina and the formation of a 50:50joint venture. It is very apparent to me that there is an extremely good fit between the corporate cultures and skill sets of our respective businesses. MRL is widely recognised as a leading provider of mining services and mine site operations in Australia along with having a high quality mine to ship logistics supply chain in the Pilbara. Our proven local Western Australian capability is extremely well complemented by Albemarle's proven technical downstream processing expertise and their international marketing capabilities in lithium. Our organisations share the same vision to develop Wodgina, a tier one asset, os a world class, 30-plus year integrated lithium operation together. I am confident that with MRL and Albemarle working together at Wodgina, we will produce and supply high quality, competitively priced lithium products into the market to meet increasing global requirements for these important energy storage products. I look forward to working constructively with Albemarle to satisfy the outstanding conditions to allow the transaction to be completed in 2019."

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Posted By : Rabi Wangkhem on Mon, 17 Dec 2018
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