Mineral Resource Share Price Higher On MARBL JV Agreement

Key Highlights: 

• Mineral Resources Limited and Albemarle Corporation have successfully amended their joint venture.
• Under the new agreement, MinRes's share of the Wodgina lithium mine will increase to 50%, and the company will continue to operate the mine.
• Albemarle will take full ownership of the Kemerton lithium hydroxide plant.

Mineral Resources Limited (ASX: MIN) and Albemarle Corporation have successfully amended their joint venture (JV) terms signed in February 2023. The updated MARBL Joint Venture will streamline commercial arrangements and enable both companies to focus on delivering shareholder value in a dynamic market.

Under the new agreement, MinRes's share of the Wodgina lithium mine will increase to 50%, and the company will continue to operate the mine. On the other hand, Albemarle will take full ownership of the Kemerton lithium hydroxide plant, which it currently operates.

The revised transaction will be effective from 1st April 2022, and Albemarle will pay MinRes an estimated US$380-400 million, including net consideration for MinRes's share of Kemerton and completion adjustments at Wodgina and Kemerton.

As part of the updated agreement, MinRes will no longer invest in any Chinese conversion assets with Albemarle and will not make any payments for joint downstream investments.

A transitional tolling arrangement will allow MinRes to continue converting Wodgina spodumene until 30th June 2024, enabling them to build their team in China. MinRes plans to market its own share of Wodgina spodumene concentrate and lithium battery chemicals within two months of the Completion Date. To support this endeavor, MinRes has established an office and warehouse in Ningbo, China.

Completion of the arrangements is expected in the December quarter, subject to approval from the Foreign Investment Review Board.

Regarding future downstream investments, MinRes aims to make decisions by the end of 2023. They plan to conduct a preliminary study on an Australian lithium battery chemical plant in the September quarter. MinRes prefers to build downstream capacity in Australia if the project economics prove valuable. They will collaborate with State and Federal Governments to refine strategies and enhance Australia's cost competitiveness globally. Considerations for investments elsewhere in the region are also underway.

MinRes Chief Executive Lithium, Josh Thurlow, expressed satisfaction with the outcome, highlighting that both parties benefit from the amended agreement. It allows MinRes to unlock value from its non-integrated Kemerton processing facility, providing flexibility to expand hard rock assets and develop integrated lithium conversion assets in Australia and beyond. The JV partners remain committed to the world-class Wodgina lithium mine while focusing on their respective strengths and delivering value to investors.

The last price of Mineral Resources Limited was $75.630, reflecting a positive change of $3.570 (4.954%) for the day.

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