Albemarle boss: Why $6.6b Liontown deal makes sense

afr.com:

Albemarle boss Kent Masters says the battery chemical giant is already eyeing the need for a new lithium hydroxide plant as part of its $6.6 billion takeover of Liontown Resources.

Mr Masters said Albemarle intended to honour offtake agreements Liontown has in place until 2030 for the bulk of the spodumene extracted from Liontown’s Kathleen Valley mine in Western Australia.

However, Albemarle wants to know more about its target’s deals with Ford, Tesla and LG Energy Solution that are indexed to lithium hydroxide prices as part of due diligence, which Liontown has allowed.

Albemarle boss Kent Masters at the company’s lithium hydroxide plant at Kemerton in WA last week. Sarah Henderson

Beyond 2030 and in the expectation of boosting Kathleen Valley production from 550,000 tonnes of spodumene a year to 700,000 tonnes a year, Mr Masters said Albemarle could build a new hydroxide plant or add capacity to existing plants as part of its downstream strategy.

Asked if there was any lingering friction between Albemarle and Liontown management in the wake of the prolonged takeover pursuit, Mr Masters said: “That’s speculation. We negotiated to something that they’re happy with, and we’re happy with. And I think if you look at the valuation, it’s a full offer.”

Mr Masters, speaking to investors and analysts for the first time since Albemarle’s $3-a-share cash offer won over the Liontown board led by Tim Goyder, said he was not anticipating a big blowout in the capital costs associated with bringing Kathleen Valley into production within the next 12 months.

“I think we’re aligned, and we’re going to move quickly to close this. They want to do the transaction and we want to do the transaction, but we’ve got to work through the due