Gina Rinehart-backed miner Liontown changes tune on Chinese money

US carmaker Ford’s unwanted lithium sold to Chinese customer as Liontown retreats from hardline stand to only doing offtake deals with Western partners.

Underground at Liontown's Kathleen Valley mine in Western Australia. Picture: Supplied

Liontown Resources may turn to China for funding after previously doing its best to avoid becoming beholden to the dominant force in global lithium supply and pricing.

The Gina Rinehart-backed lithium producer confirmed customer-led financing out of China was an option as it prepares to shift to underground mining and continues to grapple with depressed prices for the battery ingredient. 

Chief executive Tony Ottaviano said on Tuesday that Liontown’s existing financing agreements with US carmaker Ford and South Korea’s LG Energy Solutions did not preclude similar deals with Chinese customers.

Analysts grilled Mr Ottaviano on whether Liontown would run out of cash in 2025-26, amid speculation about equity raisings in the struggling lithium sector. 

Liontown has already agreed to re-sell an unwanted portion of Ford’s agreed offtake volume to Chinese lithium heavyweight Chengxin.

The deal with a subsidiary of Shenzhen Stock Exchange-listed Chengxin covers up to 150,000 million tonnes. Chengxin, which has assets in Argentina and Zimbabwe, warned earlier this month that it faced a potential loss of 850 million yuan ($181.5m) as Chinese lithium heavyweights also feel the impact of low prices.

Gina Rinehart.

Liontown ended a hardline stance on only doing offtake deals with Western partners 12 months ago when it agreed to a short-term supply arrangement with China’s Sinomine.

The Perth-based company had sought to keep Chinese lithium buyers at arm’s length in signing long-term contracts to supply Elon Musk’s Tesla, LG Energy and Ford.

Liontown had $156m in the bank at June 30 and has another $25m coming from Export Finance Australia as the company looks to defy what chief commercial officer Grant Donald has referred to as “mine killing prices”.

“We’ve got options that we have been quite creative in the past around customer-led finance and potential banking options,” Mr Ottaviano said.

“We will look at the funding in that context.”

Asked if China was a potential source of funding, Mr Ottaviano said: “All those options are open.”

Mrs Rinehart’s Hancock Prospecting owns 19.9 per cent of Liontown and has been a passive investor since acquiring its stake during a 2023 frenzy for WA lithium assets that saw New York-listed Albemarle lob and then away from a $6.6bn offer for Liontown.

Mr Ottaviano said he intended to talk to Hancock and other big investors about Liontown’s June quarter results.

“We’ll speak to them (Hancock) today. They’ve been very supportive, and they continue to be supportive,” he said.

“I suspect they’re very much focused now on rare earths (in the critical/battery mineral sector). I’m really not sure what their strategy is (in lithium). It is best you ask them that.”

Hancock has substantial stakes in US rare earths producer MP Materials, which has just received a massive boost from the Trump administration, as well as ASX-listed Lynas Rare Earths.

Mr Ottaviano hosed down speculation that he could depart Liontown after bucking the odds to bring its flagship Kathleen Valley into life against a backdrop of takeover tussles, finance uncertainty and the collapse in lithium prices.

Liontown recently named Ryan Hair to take over as chief operating officer from August 11. Mr Hair was recruited from Covalent Lithium, the Wesfarmers-SQM joint venture, where he was chief executive officer and led the Mount Holland mine and oversaw commissioning of a 50,000 tonne-a-year lithium hydroxide refinery at Kwinana, south of Perth.

He is seen as the potential successor as Liontown chief executive officer.

Mr Ottaviano said he was having “too much fun” to leave and that it's part of his leadership role to have potential successors waiting in the wings.

The Liontown share price fell 4 per cent to 83 cents in trading on Tuesday and is down sharply since reaching a 12-month high of $1.03 on July 21 amid speculation lithium prices had bottomed out. Other lithium exposed stocks, including Mineral Resources, PLS and IGO Limited which all report June quarter results on Wednesday have also lost ground since the end of last week.

Mr Ottaviano said the extreme volatility in lithium markets was highlighted by spodumene prices on the Fastmarkets index jumping $US60 a tonne last Friday and falling back $US50 on Monday.

Liontown achieved an average realised price of $984 a tonne for its 5.2 per cent lithium spodumene in the June quarter while all-in sustaining costs were $1227 a tonne.

The company continues to focus on cutting costs as it tries to ride out a downturn in prices that has seen other West Australian lithium mines, including Bald Hill, owned by Mineral Resources, and Mt Cattlin, owned by Rio Tinto, put into mothballs.

Originally published as Gina Rinehart-backed miner Liontown changes tune on Chinese money