Australia’s richest woman and other billionaire entrepreneurs wading into takeover offers threaten to cool enthusiasm over the country’s junior lithium sector, according to producers Livent Corp. and Allkem Ltd., currently finalizing a multibillion-dollar tie-up.
The country’s lithium industry has seen a frenzy of deals this year, highlighting the battery metal’s crucial role in the energy transition and a hunger for future production that has sent shares in mining juniors surging — even as the price of lithium carbonate remains in the doldrums.
But iron ore billionaire Gina Rinehart has complicated matters. She forced Albemarle Corp., the world’s biggest lithium producer, to abandon its bid for miner Liontown Resources Ltd. last month, after building a near-20% blocking stake. She and mining veteran Chris Ellison at Mineral Resources Ltd. have also separately built up holdings in Azure Minerals Ltd., sizable enough to threaten an agreed A$1.6 billion ($1 billion) cash bid from Chilean giant SQM.
“For us, if there’s any meaningful risk of somebody coming in and trying to interfere with our freedom to operate a resource, then we don’t want that resource,” Livent Chief Executive Officer Paul Graves said in an interview in Sydney. “It’s another voice in the room that may have a different view as to what to do.”
Read more: Australian Dealmakers Rush to Save $24 Billion Worth of M&A
Australia’s Allkem agreed in May to merge with US rival Livent, creating an entity with a combined market capitalization of more than $6 billion at current prices, and output equivalent to 7% of global supply in 2023. The new outfit, Arcadium, expects to become the world’s third-biggest lithium producer in terms of estimated capacity by 2027, the companies said at the time.
Allkem shareholders will meet on Dec. 19 to vote on the merger, with the deal expected to close on Jan. 4 following regulatory approvals. Graves will take the top job at the combined entity.
Deal interlopers are not the only disincentive for those seeking to benefit from lithium consolidation, Allkem CEO Martín Pérez de Solay said. High interest rates and lower price projections would compound the first-mover advantage of larger suppliers with existing infrastructure, he said.
“It’s becoming difficult for newcomers to be able to bring the production onstream,” Pérez de Solay said. “Incumbents like us are clearly favor the current dynamics in the industry because we continue to be able to deliver,” he said.
--With assistance from Sybilla Gross and David Stringer.
