Albemarle ignites takeover interest in Australian lithium miners
US chemicals giant Albemarle's $6.6 billion bid for Liontown Resources has created a M&A window for junior lithium miners that may not stay open for long.
US chemicals giant Albemarle's $6.6 billion bid for Liontown Resources tabled earlier this month could be a coming of age moment of the lithium sector on the ASX. As larger miners, battery and EV manufacturers scramble to shore up supplies of Australian “white gold” to qualify for US Inflation Reduction Act tax credits, buyer interest is expected to shift to Liontown’s fellow ASX-listed developers.
Resource buyers have largely overlooked small cap lithium companies since demand for the EV battery metal took off in 2021. Few large diversified miners have bothered with it - Rio Tinto, BHP, Hancock Prospecting and Fortescue either have zero or negligible lithium interests.
But the positive reception to Albemarle's offer for Liontown and the prospect of interest from rival bidders is sowing the seeds of change. “Lithium is still in its infancy, but the industry is beginning to grow up. What was previously a niche industry has completely changed against a backdrop of the energy transition and decarbonisation,” Maple Brown-Abbott co-portfolio manager Philip Hudak told Capital Brief.
Chinese lithium prices have fallen 50% from their record peak set in 2022, according to Goldman Sachs analysts, and the share prices of the majority of ASX-listed miners have tumbled in sync. This has left most small and mid cap lithium miners looking relatively cheap.
