Fortescue’s Nev Power to sell off lithium interests

Fortescue has decided to parcel up its lithium exploration rights in the Pilbara and sell them off.

Fortescue Metals chief executive Nev Power says the company will carve off lithium.

It is unlike Andrew Forrest to pass up the chance to be involved in an unfolding boom in a particular commodity. But that is what his one-third owned Fortescue Metals (FMG) is doing in lithium.

Rather than chase up the lithium potential of the iron ore group’s leases in the Pilbara, Fortescue has decided to parcel up the lithium exploration rights and sell them off.

Fortescue chief executive Nev Power told The Australian that the proposed sale followed a strategic review of Fortescue’s Pilbara tenements.

“We believe that these lithium opportunities will likely represent better value for others at this time,’’ he said.

Mr Power said the proposed sale “provides an opportunity for an interested party to realise the value from this world-class lithium mining district in the near term”.

Lithium is plugged in to the lithium-ion battery craze that has the potential to disrupt the way in which the world stores and consumes energy across industries and domestic settings.

But it is not one that Fortescue wants to hop on to by spending the money to test the potential of its Pilbara iron ore leases to also host lithium-bearing pegmatites, a hard rock source of the metal.

“Fortescue’s primary focus is on delivering value for our shareholders, by ensuring our core iron ore business is the safest, lowest cost and most profitable that it can be,’’ Mr Power said.

The global surge of interest in lithium-ion batteries has fuelled spectacular gains for a number of ASX-listed lithium producers/developers, as well as those that have made graphite, also used in lithium-ion batteries, their focus. One of those in the lithium space is Pilbara Minerals, now a $630 million company courtesy of the success it has had in outlining one of the world’s biggest hard-rock sources of lithium at its Pilgangoora deposit, 120km south of Port Hedland in the Pilbara.

Pilbara chief executive Ken Brinsden said he was aware that Fortescue was marketing the lithium rights on its leases.

“While we already have a world-class lithium-tantalum resource at our Pilgangoora project which will underpin a long-life project, we continually assess opportunities to grow our existing low-cost, high grade Pilbara position for the future growth of the company,’’ Mr Brinsden said.

“The North Pilbara region is unquestionably one of the world’s most prospective regions for lithium, and we see it becoming a dominant centre for the production for many decades to come, with Pilgangoora as ground zero.’’

ASX-listed Orocobre has been another to benefit from the lithium boom. It is now a $1 billion established and growing lithium producer from brine deposits in Argentina. It has ruled out interest in the Fortescue sale.

“Orocobre sees the greatest opportunity in continued production at our low cost, high ­margin Olaroz operations in ­Argentina. We have a very large resource to support our plans to at least double production over the next several years,’’ a spokesman said.