Plenty of interest in Greenbushes lithium mine before IGO buys $2bn stake

An employee holds processed lithium at Greenbushes. Picture: Bloomberg

About 20 parties were eyeing a stake in Western Australia’s Greenbushes lithium mine before IGO agreed to buy an interest for about $2bn, sources say.

Most wanted all of the 51 per cent stake, owned by China’s Tianqi, whereas IGO is only buying part, which will offer limited operating control.

The jury remains out as to whether it is a good deal for IGO, with some suggesting that the world has an oversupply of lithium, which is used to make batteries.

But Greenbushes is the best hard rock lithium mine in the world, and the deal comes at a time that the soaring share price of electric car company Tesla has pushed up the value of the commodity.

As of Tuesday night, IGO was yet to formally announce the transaction to the market and remained in a trading halt.

IGO will raise about $800m to fund the acquisition through investment banks Macquarie Capital and Citi, sources say.

The company already has about $500m on its balance sheet and is also selling a 30 per cent stake in its Tropicana gold mine in Western Australia through Macquarie Capital.

Grant Samuel launched the sale of a stake in Greenbushes earlier this year, and parties running the ruler over the assets included Rio Tinto, Wesfarmers and Fortescue Metals.

Greenbushes is controlled by Talison Lithium, which is 51 per cent-owned by China’s Tianqi Lithium.

US-based lithium specialist Albemarle owns the remainder.

Expectations were that the Chinese owner would refinance the asset or Albemarle would take up its pre-emptive rights to buy the remaining interest.

Tianqi Lithium has been assessing options as it wrestles with a major debt pile in China, and a sale could help it refinance the mining operation.

Tianqi Lithium’s debt woes follow its acquisition in 2018 of a stake in the Chile-based lithium production and distribution company SQM from Nutrien for about $4.07bn.