Gina Rinehart, Australia’s richest woman, has intervened in one of the biggest battery metals deals to date, building a nearly 17% stake in Liontown Resources Ltd and threatening its A$6.6 billion ($4.2 billion) takeover by US giant Albemarle Corp.
What the iron ore billionaire has yet to do is explain what she will do with her growing influence in the lithium miner.
The big picture is clear. Rinehart, arguably the most formidable figure in Australian mining, is placing her biggest bet on lithium at a time when forecasts point to surging long-term demand for materials linked to the energy transition – and a declining outlook for the steelmaking commodities that built her family’s fortune.
Other Western Australian tycoons are following a similarly green path, most notably Fortescue Metals Group Ltd. founder Andrew Forrest, who has embraced hydrogen.
But what Rinehart’s move means in practice is less clear, even though Albemarle is expected to complete its due diligence on Liontown within days – the last major step before a binding offer can be signed. It’s left shareholders on all sides with more questions than answers.
“Investors seem to want to know Rinehart’s plan,” said Seth Goldstein, an equity strategist at Morningstar Research Services LLC. “So far, there has been nothing but stock purchases, and no alternative proposal for value creation has been presented.”
Liontown, coveted for its promising Kathleen Valley lithium project, announced in early September that it would support an improved offer from Albemarle after months of pursuit. Rinehart’s privately-held Hancock Prospecting Pty, which had already been buying shares, followed days later with the announcement that it had built up a stake of just over 7%, which it gradually increased to dangerously close to a blocking minority.On Friday, it increased its stake further to 16.7%, although again the price did not exceed A$3 per share – the offer on the table from Albemarle.
Hancock said it was now Liontown’s largest shareholder and welcomed “the opportunity to participate as a shareholder in the Kathleen Valley project and to influence the overall future direction of the company”, sticking to the vague language of previous statements about helping to manage “operational ramp-up risks”.
It hinted at further increases to 19.9%, just above the threshold that would normally trigger a mandatory takeover, but provided no blueprint and said it did not plan to push for a board seat for now.
Fly in the ointment
Still, any takeover further complicates Albemarle’s chances of winning a shareholder vote, which would require 75% approval – and the chances of getting to the vote at all.
Pedro Palandrani, director of research at ETF issuer Global X, which holds Liontown’s shares through its $2.5 billion Global X Lithium & Battery Tech ETF, is among the investors who see a “significant inconvenience for Albemarle”. A problem given that “spodumene in Australia is critical to Albemarle’s ambitions to expand its lithium hydroxide capacity”.
What is certain is a battle between industry heavyweights.
Rinehart, the feisty only child of one of Australia’s iron ore pioneers, has described inheriting “a bankrupt estate and the chairmanship of a company in serious trouble”. She built up huge iron ore mines in Western Australia that export some 60 million tonnes of the steel-making material a year, and has since expanded her portfolio to include copper, gold and coal, as well as cattle, dairy and property.
But she is not known for her green credentials. A vocal sceptic, she criticised school curricula in a speech in 2021 for teaching the science of man-made climate change.
Still, with a net worth of $18.9 billion, it is a formidable opponent and one with a track record of mining success, even if lithium is on a different scale. Howard Klein, a partner at RK Equity who owns Albemarle shares, said he saw collaboration as an option, given that Albemarle is already working with partners elsewhere.
“Albemarle, which doesn’t have much direct mining expertise, could benefit from a strong Australian partner like Rinehart,” he said.
There’s also the option of Albemarle throwing in the towel. Rinehart is a potentially troublesome minority shareholder and not the only fly in the ointment for the US giant, with lithium prices plunging on China’s sputtering recovery and disappointing near-term demand after a buying frenzy that sent global prices soaring last year. Liontown shares closed at A$2.99 on Friday – uncomfortably close to Albemarle’s “best and final” offer.
“The risk of the deal being blocked is increasing, yet Liontown’s share price is still trading very close to Albermarle’s proposed offer,” said Carrick Ryan, a portfolio manager at Westbeck Capital Management, which holds lithium miners but not Liontown.
“While we don’t know if Hancock will make an offer, the deal is looking increasingly expensive as valuations in the sector fall.”
