In a significant move in the lithium industry, Albemarle Corporation, an international chemical manufacturing company that specializes in lithium and bromine with roots in North Carolina, announced its intention to acquire Liontown Resources Limited. This acquisition aims to strengthen Albemarle’s position in the rapidly growing lithium market and represents a substantial deal valued at A$6.6 billion (US$4.32 billion).
Albemarle Corp is one of the top producers of lithium. As the demand for lithium increases, Albemarle Corp seized the opportunity to try to acquire Liontown, a battery materials producer based in Australia. Liontown controls two lithium mines in Western Australia. They are also material suppliers for Ford and Tesla.
Albemarle Corp’s goal is clear. They want to buy into an investment opportunity that will bring them a return on investment, protecting their advancement into being a global leader in providing lithium. This also provides a significant advantage for the United States, as a U.S.-based company could have access to two of the biggest lithium deposits in Australia, which can make the United States private sector a major player in lithium supply worldwide.
Lithium is continuously becoming crucial by the day as EVs continue to be produced. Liontown is taking its time before accepting a binding deal. If they go through with a binding deal, they will no longer take charge of continuing their new Kathleen Valley Lithium Project, a 2022 mining initiative for lithium in Western Australia. Liontown has two choices, ensure they get an excellent deal worth them leaving a growing lithium business or, they might look into alternative methods to still take the lead in their 2 lithium projects and offer a certain percentage of ownership to Albemarle.
Acquisitions are difficult, especially faced with the decision to sell everything Liontown worked for to be a major producer of lithium. Although a $4 billion dollar offer is tempting to some, there is also the opportunity cost factor to take into consideration. Liontown could be missing out on billions of dollars in return on investment over time as the lithium industry grows. Although this is a benefit for the U.S. lithium sector, Australian lithium businesses would lose out as they would have to outsource from Albemarle and not domestically.
Liontown should investigate methods to have a continued stake in lithium sales from Albemarle and discounts on lithium purchases for Australian businesses. The U.S. and Australian private sectors working in coalition, especially in the lithium industry, would be a formidable force as demand for lithium increases. This could be a great counteroffensive to the Chinese looking to mine lithium in Africa and Latin America. Looking to form partners versus trying to control allows for ideas to be exchanged while both companies can profit from these sales, ensuring no one loses out on a growing lithium industry, and combining ideas can lead to exploring new pathways to find and mine more lithium sustainably.
Author: Aleksandros Spaho
