Andrew Liveris-backed Leichhardt in talks to buy Rio’s Lake MacLeod salt operation
Rio Tinto is considering the sale of a key salt production hub in WA, as emerging supply gaps lift interest in Australian salt production.
Former Dow Chemicals boss Andrew Liveris is on the cusp of securing an entry into the Australian salt market, as Rio Tinto considers the sale of part of its Dampier Salt operations.
Rio confirmed on Thursday it is in talks to sell its Lake MacLeod salt operation near Carnarvon in WA, with Leichhardt Industrial Group believed to be the potential buyer.
Companies associated with Mr Liveris are major shareholders in Leichhardt Industrial Group, which is also backed by Melbourne’s Victor Smorgon Group, private equity major Resource Capital Funds and Germany‘s ConSalt.
Leichhardt is one of a slew of would-be salt project developers in WA, along with the Kerry Stokes-backed BCI Minerals, German chemicals and fertilisers major K+S, and several Japanese industrial majors.
Industrial salt is used in plastics production, glass, industrial chemicals, detergents and soaps and textiles.
Since 2017, Leichhardt has been trying to develop its own Eramurra salt project, 55km southwest of Karratha in the Pilbara, looking to enter the market by 2028, when the company believes a supply gap of some 17 million tonnes a year into the Asian market will have emerged.
But the company now appears to be looking for an early entry into the salt market, through the acquisition of Lake MacLeod from Rio.
Rio did not name Leichhardt as the potential buyer of the operation on Thursday, but Dampier Salt’s general manager general manager Laura Thomas told staff a sales process was underway this week, although it was “relatively early in the course of negotiations”.
A spokesman for Rio said there was “no certainty a transaction will be concluded”.
Lake MacLeod is capable of producing about 3 million tonnes of salt a year, about a third of the total output of Dampier Salt, which booked underlying EBITDA of $US54m for the first half of the year for Rio on revenue of $US192m.
Any sale of the operation by Rio is likely to be subject to significant scrutiny, however, given the environmental sensitivity of the massive salt lake that underpins the operation.
Rio operates in the area under a 1967 State Agreement with the WA government, which covers almost the entire 2000 square kilometres of the lake area – and limits the involvement of WA government’s environmental regulators in its management. The State Agreement would also likely ensure the WA government would have a say in any sale of the project.
In addition to hosting one of the world’s biggest inland mangrove systems, the northern part of Lake MacLeod is also considered one of the most important wetlands in Australia for migratory shore birds
Rio Tinto mostly operates in the southern part of the lake, but the northern region has been previously considered for inclusion as a wetland of international significance under the RAMSAR agreement – a proposal supported by Rio – but that listing was not progressed.
Ms Thomas acknowledged the importance of the region in her email to staff.
“The decision to enter into these negotiations about the potential sale of Lake MacLeod is not one we have taken lightly,” she said.
“As you all know, DSL has had the privilege of a long history in the Carnarvon community. We have a very deep respect and connection to the Lake MacLeod site. It is unique, full of history and biodiversity, and holds some of the most capable and committed people any of us have had the honour to work with.”
Rio Tinto owns 68 per cent of Dampier Salt with Marubeni Corporation holding a 22 per cent stake and Sojitz 10 per cent.
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