Mineral Resources (MinRes) is looking to snap up the shuttered WA lithium mine from Alita Resources, but there’s a catch.
Alita went into administration in 2019 when the price of lithium fell below a sustainable level for the mine.
The company was then set to be purchased by Austroid, a US-based lithium miner. However, this deal was blocked by Australian Treasurer Jim Chalmers earlier this year on advice from the Foreign Investment Review Board (FIRB).
The decision was owing to Austroid’s ties with Chinese lithium battery maker Sichuan, which FIRB determined could potentially harm Australia’s economic interests. The director of Austroid Australia, Mike Que, is the son of a major stakeholder in Sichuan.
As recently as last week, rumours were swirling that Glencore had launched an under the table offer to acquire all the debt in Alita with the aim of relisting the company for up to $1.8 billion.
Then days ago, it was revealed that the mine was set to be sold to an unnamed buyer. That buyer turned out to be MinRes.
MinRes has entered into an implementation agreement with Alita’s administrators, McGrathNicol, for the acquisition of Bald Hill. However, the administrator must first successfully apply to the Supreme Court of WA to place Alita into liquidation.
“The outcome of applications in the Supreme Court is currently uncertain with no guarantee that the transaction will be able to proceed, and details are currently subject to commercial confidentiality between transaction parties,” MinRes said.
If the company passes this hurdle, MinRes will be able to pay out Alita’s debt and acquire the lithium asset.
“It is reported that the lithium mine operates at a loss… with profits transferred overseas via an offtake agreement with a Hong Kong-registered entity, Yihe Cleantech Material Limited,” MinRes said.
“It has been alleged that this offtake agreement has also led to an under-payment of state royalties.
“MinRes’ successful acquisition of the Bald Hill mine will ensure that the mine is being operated by an experienced Australian ASX listed lithium miner, and any profits are generated and taxes and royalties paid in Australia to the benefit of Australian taxpayers.”