Gina Rinehart’s latest move falters as share price tanks

Australia’s richest women is known for her savvy business and a recent investment has led to speculation that she is “waiting in the wings to pounce”.

Australia’s richest women is known for her savvy business but a recent investment at well above the current share price has led to speculation that she is “waiting in the wings to pounce”.

Last year, Gina Rinehart began accumulating a significant shareholding in Australian lithium miner Liontown Resources.

Lithium is a major component in electric vehicle batteries.

Gina Rinehart. PICS: Hancock Prospecting

By the end of 2023 she had spent around $1.3 billion to accumulate a 19.9 per cent stake in the Australian Securities Exchange (ASX)-listed business, buying most of her stake at above $2.50 per share.

The share raid led to takeover speculation due to rules that prohibit an investor owning more than 20 per cent of a company without launching a takeover bid.

Liontown has be the subject of a spectacular share price fall. Picture: ASX

But in recent days Liontown’s share price has tanked, falling from $1.69 at the start of January to hit a low of 88 cents before closing at 94 cents yesterday.

The rapid fall followed a collapse in the lithium price, which has fallen more than 80 per cent over the past year due to an increase in the global supply of the mineral and slowing electric vehicle sales.

The imploding lithium price led the company to announce a review of a major mining project it is developing, Kathleen Valley, after it emerged that lenders had withdrawn a $760 million loan to fund the WA mine, as the funding was tied to a higher lithium price.

It’s estimated the fall has seen the value of Ms Rinehart's stake in the company fall by about 70 per cent to around $910 million.

Clockwise from top right: Liontown Resources chairman Tim Goyder, major shareholder Gina Rinehart and Kathleen Valley project

On paper, it looks like the billionaire has made a rare misstep, but savvy investors believe otherwise.

On chatboard Hot Copper, investors speculated that she would launch a takeover bid for the business, which she is prohibited from doing until after February 11, and would be able to secure it at a significant discount.

“Gina can get this real cheap now,” one investor wrote, with another commenting:

“Gina might take it out for $1 [a share].”

“She’s going to own LTR [Liontown] for less than $1.50 [a share]”, speculated another investor while a fourth described her as “waiting in the wings to pounce”.

Hancock Prospecting chair Mrs Gina Rinehart in WA.

If Ms Rinehart does make a bid for the company, it won’t be the first time Liontown has been the subject of a takeover.

In October 2023, US lithium mining giant Albemarle withdrew a $6.6 billion takeover bid for Liontown.

At the time it was speculated that the emergence of Ms Rinehart as a major shareholder – who may have demanded a seat on the board – had scared Albemarle off.

However given subsequent events, its withdrawal may have had more to do with the outlook for lithium prices.

Albermarle sold its four per cent stake in Liontown on January 17 for $1.26 a share, just days before the company released news about the withdrawal of its loan and subsequent scaling back of the Kathleen Valley project.

Originally published as Gina Rinehart’s latest move falters as share price tanks