Albemarle Corporation has formally withdrawn its $4.16 billion non-binding offer to Liontown Resources, forcing the lithium developer to enter a trading halt while it raises funds for its Kathleen Valley lithium project in Western Australia.
Albemarle withdrew its indicative proposal amid “growing complexities,” the companies confirmed in separate statements that came days after Hancock Prospecting, an iron ore miner controlled by Gina Rinehart, raised its stake to 19.9 per cent of Liontown.
Albemarle’s decision comes as the company nears the end of its exclusive due diligence process, with the company saying the acquisition withdrawal announcement is consistent with its disciplined approach to capital allocation and the company will continue to execute its long-term growth strategy.
Planned expansions to deliver volumetric growth continue to progress across the company’s global portfolio. Albemarle’s capital allocation priorities remain investing in high-return organic and inorganic growth, maintaining its financial flexibility and investment grade credit rating, and funding its dividends.
Albemarle is one of Australia’s biggest lithium investors, with mining assets at Wodgina and Greenbushes, and with the Kemerton lithium hydroxide plant, which is currently undergoing a significant expansion.
Liontown said it had halted trade to finalise funding for Kathleen Valley in Western Australia, which is due to start producing lithium in the middle of next year.
Kathleen Valley is widely regarded as one of the world’s top five lithium projects, and Liontown has already signed deals to supply Ford Motor, Tesla and electric vehicle battery maker LG Energy.
Liontown said last month it was well advanced in discussions with lenders to obtain at least $450 million to cover initial costs as it raised its capital cost estimate by six per cent to $951 million but kept its first production target.
Both Liontown and Hancock declined to comment, however, Hancock had previously cast doubt on Liontown’s ability to bring Kathleen Valley online within cost and timeframe projections and offered its services.
CEO of Albemarle, Kent Masters, said “Our engagement with the Liontown team has been meaningful and productive. We appreciate the level of cooperation we have received, and we thank the entire team for their efforts.
“That said, moving forward with the acquisition, at this time, is not in Albemarle’s best interests.”
