Hancock Prospecting, led by mining magnate Gina Rinehart, has purchased an 18% stake in Azure Minerals to block a takeover attempt by Sociedad Química y Minera de Chile (SQM). The move comes after Rinehart successfully prevented Albemarle from acquiring Liontown Resources.
Azure Minerals is currently focused on developing the Andover lithium and nickel-copper-cobalt project in Western Australia. The company’s shares have soared over 15 times in value since the end of 2022, reaching their highest price since June 2008. This surge in valuation is partly due to promising drilling results at Andover, although further evaluation is needed to determine the project’s true potential.
Azure Minerals recently announced a binding implementation transaction with SQM. The deal includes a scheme of arrangement priced at A$3.52 per share. However, if the scheme fails, SQM has plans to launch a conditional off-market takeover bid at a slightly lower price of A$3.50 per share. Rinehart’s acquisition of an 18% stake prevents SQM from withdrawing its offer if another shareholder acquires more than 19% of Azure Minerals.
Rinehart’s foray into the lithium sector indicates her recognition of the changing market for iron ore, her primary source of wealth. Despite a slowdown in China’s demand for iron ore, Hancock’s Roy Hill Holdings reported significant operating cash flow of A$3.3 billion for the year ending in June.
Increase in Lithium Deals
SQM has been expanding its portfolio beyond Chile to secure its position as a leading player in the booming battery metals sector. Like other major lithium producers, SQM views mergers and acquisitions as a more efficient way to expand capacity compared to building new projects from scratch. The decline in valuations for some lithium producers has made them attractive targets for investors seeking entry points in the clean energy and EV supply chain market.
In addition to its interest in Azure Minerals, SQM recently acquired a 30% stake in Pirra Lithium and plans to increase its stake to 40% by injecting A$3 million for exploration. SQM also holds a 50/50 interest with Wesfarmers in the Mt. Holland lithium project, which is expected to commence operations in the second half of 2024 and produce up to 50,000 tonnes of lithium hydroxide per year.
Other recent moves in Australia’s lithium sector include a partnership with Tambourah Metals for the Julimar North project, as well as smaller agreements with companies such as Kalamazoo Resources and Dart Mining.
Rinehart’s ownership stake in Azure Minerals not only thwarts SQM’s takeover attempt but also highlights the increasing competition in the lithium sector as companies vie for a strong position in the growing market for battery metals.
“Rinehart’s move into the lithium sector shows that she is aware of the changing market for iron ore, her main source of wealth.” – [Your Name]