Albemarle cools its M&A jets

Don’t expect any near-term mergers and acquisitions (M&A) from Albemarle to be of the scale of its recently withdrawn Liontown Resources bid.

Albemarle said it’s pulling back on its M&A activity, with chief financial officer Scott Tozier suggesting the company will be focussed on its capital expenditure spending given the softer market conditions.

“We continue to evaluate a broad range of M&A opportunities,” he said. “However, in the current environment, the scale of those opportunities are not as big.”

Albemarle ended its bid for Liontown after Gina Rinehart’s Hancock Prospecting acquired a 19.9 per cent stake in the company, but Albemarle cited the downward trend in lithium prices as the main reason for its withdrawal.

Tozier emphasised there had been “productive engagement with Liontown and as we learned more, we decided that moving forward with the acquisition at this time was not in Albemarle’s best interest”.

As the lithium price slump continues, Albemarle confirmed that it is considering scaling down production at the Greenbushes mine in Western Australia.

Owned in partnership with Tianqi and IGO, Greenbushes is Australia’s largest hard rock lithium mine, producing 1.49 million tonnes of spodumene concentrate in the 2022–23 financial year.

The AFR reported that battery manufacturers and carmakers including LG Energy Solution, General Motors and Honda have cut back electric vehicle growth targets in the past month, raising concerns of an oversupply of lithium.

Albemarle warned low prices could have implications for the whole sector, citing China’s slowing or halting operations.

While Albemarle is considering a scale-back at Greenbushes, there is no indication this will extend to its Wodgina lithium mine in WA that it owns in partnership with Mineral Resources.