Albemarle to buy Australian lithium miner Liontown

After nearly a year of negotiations, the Australian lithium miner Liontown Resources is accepting Albemarle’s takeover offer, worth $4.3 billion. The US firm will conduct an appraisal of Liontown’s business before finalizing the deal.

Albemarle first tried to acquire Liontown for about $1.39 per share in October 2022, but Liontown executives held out for more. After Albemarle raised its bid several times, the company’s final offer was $1.94 per share. Liontown’s stock price rose to $1.87, an 8% jump, after news of Albemarle’s offer.

Major lithium firms are racing to increase production and meet growing demand from electric vehicle battery makers, but opening new mines can take a long time. A lithium mine that Albemarle plans for in North Carolina may not start up until 2027. Acquiring mining projects from smaller developers is often faster, so there has been a flurry of dealmaking in 2023.

In May, Allkem and Livent agreed to merge to form a major lithium player with mines in Canada, Argentina, and Australia. Australia’s Essential Metals rejected a $92 million takeover offer from one of China’s largest lithium firms, Tianqi Lithium in April but later accepted a $102 million bid from Develop Global. In August, Chile’s SQM tried to buy the Australian lithium miner Azure Minerals for roughly $600 million, but Azure turned down the proposal.

The increased interest in lithium production is raising the price of acquiring mining projects, such as Liontown’s, that are close to opening.

Daniel Jimenez, a partner at the lithium industry consulting firm iLiMarkets, says Albemarle is willing to pay a higher price for mines that will come on line quickly. Jimenez says that other big firms, such as SQM, are pursuing less expensive projects that aren’t as advanced, even if that plan entails a risk that the projects will encounter environmental or technical problems.

Jimenez expects the rapid pace of deals to continue as major lithium firms try to maintain their market share. “Incumbents are generating a lot of cash today, and they will still try to grow,” he says. “They can do it now with cash in their pockets.”