Lithium, a key ingredient in batteries for electric vehicles, is in high demand as the world shifts to cleaner energy sources. And one of the hottest targets in the lithium market is Azure Minerals, an Australian developer with a promising project in Mexico.
Azure Minerals has received a revised takeover offer from Chile’s SQM and Australia’s Hancock Prospecting, valuing the company at A$1.70 billion ($1.14 billion). The offer, announced on Tuesday, is higher than the previous bid of A$3.52 per share, and has the unanimous support of Azure’s board.
The deal would give SQM and Hancock Prospecting, both major players in the mining industry, access to Azure’s flagship Andover project, which has shown high-grade lithium mineralization. SQM is one of the world’s largest producers of lithium, while Hancock Prospecting is run by Gina Rinehart, Australia’s richest person and a prominent iron ore magnate.
The offer also has the backing of two of Azure’s largest shareholders, Creasy Group and Delphi Group, which together own about 23% of the company. They have indicated that they intend to sell their shares unless a superior proposal emerges.
According to a report by Mining.com, Azure’s shareholders will vote on the deal in early 2024, subject to regulatory approvals and other conditions. If approved, the deal would be one of the largest acquisitions in the lithium sector, reflecting the growing interest and competition for the metal.
Lithium is a vital component of rechargeable batteries that power electric vehicles, smartphones, laptops, and other devices. As the demand for these products increases, so does the need for more lithium supply. According to a report by Roskill, a consultancy firm, the global lithium demand is expected to grow by more than four times from 2020 to 2030, reaching 1.7 million tonnes of lithium carbonate equivalent.
Australia is the world’s largest producer of lithium, accounting for about half of the global output in 2020. The country has several large-scale lithium mines, as well as many exploration and development projects. Azure’s Andover project, located in Western Australia, is one of the most promising ones, with an estimated resource of 263,000 tonnes of lithium oxide.
The project is also close to other established lithium operations, such as Pilbara Minerals’ Pilgangoora mine and Mineral Resources’ Wodgina mine. These mines have recently attracted significant investments from Chinese and Korean companies, such as CATL, Ganfeng Lithium, and POSCO, highlighting the strategic importance of the region.
The deal between SQM and Hancock Prospecting would create a strong partnership between two experienced and well-funded mining companies, with complementary skills and assets. SQM has extensive expertise in lithium extraction and processing, while Hancock Prospecting has a track record of developing and operating large-scale projects in Australia.
The deal would also benefit the local economy and communities, as the partners have committed to creating jobs, supporting local suppliers, and investing in social and environmental initiatives. The deal would also boost Australia’s position as a leading supplier of lithium and a key player in the global energy transition.
The offer from SQM and Hancock Prospecting is the latest example of the consolidation and competition in the lithium industry, as companies seek to secure their share of the booming market. The deal also shows the confidence and optimism in the future of lithium, as the world moves towards a cleaner and greener future.
