Gina Rinehart strikes Azure blow in lithium battle

Save articles for later

Add articles to your saved list and come back to them any time.

Gina Rinehart’s Hancock Prospecting has joined forces with a Chilean mining giant in a $1.7 billion bid to takeover Australian lithium miner Azure Minerals.

Hancock said it has partnered with Sociedad Química y Minera (SQM), adding its weight to an ongoing takeover tussle for Azure and in the process cutting out rival mining magnate Chris Ellison’s Mineral Resources, another large investor in West Australia’s lithium sector.

Most Australian lithium mines produce spodumene – a crystalline powder that is about six per cent lithium.Credit: NYT

Rinehart is one of several West Australian mining billionaires who are in a mad scramble to gain control over the state’s vast deposits of lithium – the metal dubbed “white gold” due to its market value and silver colour.

Lithium’s value lies not in its scarcity, but in the booming demand for batteries, which are the driving force behind the global electric vehicle wave. The mineral is the car’s most expensive component.

Azure’s flagship Andover lithium project boasts hundreds of outcropping lithium-rich rocks over a nine kilometre range near Roebourne in Australia’s remote Pilbara region.

SQM controls 19.4 per cent of Azure’s stock and had its original $3.52-a-share offer endorsed by the miner’s board. It’s been joined on the share register by Hancock, which took 18.3 per cent, in a takeover play reminiscent of Hancock’s recent demolition of US giant Albermarle’s aspirations to seize control of another West Australian lithium developer Liontown.

In the face of Hancock’s presence, Albermarle eventually gave up its hopes of taking full control of Liontown. Similar tactics tilted the Azure battle in favour of Hancock.

In a move that pincers Ellison, the partnership said two other major shareholders in Azure – mining legend Mark Creasy’s Creasy Group and German-based Delphi Group – intend to sell all their shares to SQM and Hancock unless a superior proposal emerges.

Ellison owns 13.56 per cent of Azure, while Creasy controls 12.84 per cent, and Delphi has a 10.15 per cent stake. Azure’s shares went into a temporary trading halt on Monday at $3.63.

Gina Rinehart’s Hancock has partnered with Sociedad Química y Minera, adding its weight to an ongoing takeover tussle for Azure.Credit: Michael Quelch

SQM’s chief executive, Ricardo Ramos, said his company and Hancock had signed a binding implementation deed with Azure minerals to acquire all its shares for a cash price of $3.70 a share, backed up by a joint off-market takeover bid at a cash price of $3.65 if the deed didn’t give them full control of Azure.

Azure said the new offer was a 5.2 per cent premium over SQM’s original offer which the board unanimously recommended to shareholders in October. “We encourage all shareholders to support the transaction,” managing director Tony Rovira said.

Ramos said the revised offer to Azure’s shareholders provided compelling cash value in a time of broader market volatility.

“We are pleased to have received the unanimous support from the Azure Board and support from substantial shareholders Delphi Group and Creasy Group for the transaction,” Ramos said.

He said SQM would use its lithium expertise and Hancock’s significant local mining knowledge to manage the elevated risk of exploration drilling at Andover.

Creasy is a long-term shareholder in Azure. His company Yandal also directly owns a 40 per cent chunk of the Andover prospect.

Lithium’s importance was underscored recently by the Albanese government doubling the finance available to local exporters of essential elements for batteries and other renewable technologies from $2 billion to $4 billion.

The sector gained serious attention between 2014 and 2018, when an army of rusted-on retail shareholders piled into ASX-listed lithium prospects, motivated by the material’s importance to the electric vehicle revolution which was starting to take shape just six years after Tesla unveiled its first car.

The Business Briefing newsletter delivers major stories, exclusive coverage and expert opinion. Sign up to get it every weekday morning.

Most Viewed in Business

From our partners

Source: Read Full Article