Billionaire’s Liontown buy up threatens lithium takeover

Hancock Prospecting Pty. now owns 14.67% of Liontown, the target of the Albemarle Corp. bid, according to an ASX filing late Tuesday. The firm controlled by Australia’s richest woman has been building its stake in the fellow Perth-based miner over the past month, up from 7.72% on Sept. 12.

A stake above 15% has generally proven effective in blocking shareholder approvals of takeovers under Australian law. With the US-based Albemarle’s takeover due diligence of Liontown set to conclude as early as Monday, Rinehart’s accumulation may complicate one of the biggest deals in what has become one of the world’s hottest resources.

Albemarle was granted due diligence after raising its cash offer by 20% to A$3 in a best and final proposal, Liontown said Sept 4. Hancock said none of its recent share purchases have been above the A$3 offer price.

Liontown closed at A$2.95 on Tuesday in Sydney, and the shares are up more than 120% since the start of this year. The stock edged up 0.3% to A$2.96 at 10:11 a.m. in Sydney on Wednesday.

Hancock has criticized the management of Liontown’s Kathleen Valley project, saying it faced “significant execution, operational ramp-up and market risks,” in a Sept. 29 statement reporting the firm had increased its stake to 12.4%.

Demand for lithium has surged in recent years as carmakers, driven by climate policies, attempt to reinvent themselves as electric vehicle manufacturers. Australia’s government has ambitions to help break China’s stranglehold on the battery supply chain — a priority for the US and other western governments — to help fuel the EV boom.

While Australia produces more than half of the world’s lithium, it ships almost all of it to China in the form of bulky, low-grade ore, where it is refined into a delicate, battery grade chemical.