Speculation continues over sale of Albermale stake in Greenbushes lithium mine

Greenbushes is the best hard rock lithium mine in the world. Picture: Bloomberg

Speculation is mounting that US-based Albemarle may be considering selling down its 49 per cent stake in the Greenbushes lithium mine to its Australian-listed partner IGO, after the world’s largest lithium producer this month slashed jobs and shut part of a processing facility in Western Australia.

Greenbushes in WA is a global standout, and there is scepticism about the market chatter, although IGO wants to buy more of the asset should it be available, say sources. IGO did not comment, while an Albemarle spokesperson said the company had no plans to sell its Greenbushes stake.

\Albemarle’s share price has halved in the past year, with its market value at about $US10bn ($15.16bn) on the New York Stock Exchange, and it has capital spending requirements on other assets within its global portfolio.

Yet whether it would sell Greenbushes to fund capex on lesser-quality assets is another story.

One reason a sale may be on the table is that Greenbushes does not qualify for the Inflation Reduction Act benefits in the US because of its partial Chinese ownership of 25.1 per cent.

To quality, Chinese ownership would need to be 24.9 per cent or less, although the US government may show some leniency.

The US-based IRA provides tax credits for clean energy.

IGO purchased a stake in Greenbushes in 2020 for $2bn.

IGO and China’s Tianqi both own 51 per cent in a joint venture arrangement.

US-based lithium specialist Albemarle owns the remainder.

Greenbushes is the best hard rock lithium mine in the world, and the sale talk comes a year on from when the price for the commodity hit fever pitch as the world bet on growing demand for batteries used in electric vehicles.

However, the price has come off the boil, down 90 per cent since 2022, with a global oversupply and more caution on the time frame of the growing electrification of vehicles globally.

Last time the stake came up for sale, Rio Tinto, Wesfarmers and Fortescue Metals all looked.

The Australian reported last month that Albemarle, Tianqi and IGO would be taking the brakes off the giant Greenbushes mine despite low lithium prices, with the mine set to lift production over the next year as IGO intensifies its hunt for growth opportunities.

For the June quarter, Greenbushes production increased 19 per cent to 332,000 tonnes of concentrate – returning to more normal levels after the partners in the mine elected last year to stockpile concentrate and slow output due to dire market conditions. Average prices for the period fell marginally to $US1020 a tonne, delivered to the port, down from $US1034 a tonne.

But the lift in volumes led to a 12 per cent fall in cash production costs, to $338 a tonne.

Albemarle this month slashed 300 jobs in Australia to respond to the industry headwinds, as it shelved the construction of a production unit at Kemerton, south of Perth, and a third production unit at the facility near Bunbury, and mothballed its second unit.

Benchmark lithium carbonate prices in China are at their lowest point in three years at 83,500 yuan/tonne ($17,593), down by 85 per cent from a record high of 598,000 yuan/tonne in late 2022.

Albemarle’s Kemerton plant is a major lithium producer and manufacturer in Australia, and produces technical and battery-grade lithium hydroxide for use in energy storage and other industrial applications. It told investors it would instead focus manufacturing efforts on Train 1.

Albemarle last year was forced to walk away from a $6.6bn takeover deal for Liontown Resources after mining billionaire Gina Rinehart stymied the deal with an on-market spending spree.

Several lithium mines have closed in the past year, including Core Lithium’s Grants mine near Darwin, while Mineral Resources announced its Yilgarn iron ore operations will close by the end of the year.