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Mineral Resources (ASX:MIN) has staged an impressive recovery in recent months, and that upward momentum continued on Wednesday as the company inked a deal with SK-based POSCO to form a lithium partnership – in the same week, spodumene prices have hit US$1,100/tn again for the first time in over a year.
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So what’s the Wednesday deal ultimately about? MinRes has, via a binding agreement, moved to allow POSCO to take a 30% stake in its existing lithium business as a joint venture, which in turn will hold Mineral Resources’ existing 50% ownership of Wodgina and Mt Marion lithium mines.
MinRes is to retain a 70% interest in the JV; POSCO picks up its stake for US$765M, or A$1.2B, which ultimately values MIN’s 50% interest in Wodgina and Mt Marion at nearly A$4B. If that feels like a lot, this finance journalist agrees with you, but clearly, POSCO are bullish on the battery metal thematic.
For its part, POSCO gets for its 30% stake an equivalent amount of spodumene concentrate from MinRes, which the former wants for its own downstream processing.
Earlier this week, both JPMorgan and Citibank came out with forecast upgrades for lithium prices in the coming 24 months as grid-scale battery energy storage demand is anticipated to eat into lithium supplies globally, pushing prices back up. At the same time, CATL remains yet to recommence nameplate works at a major Chinese lithium mine, though that only supplies some 3% of the global market.
The market was more than happy to receive the news, suggesting enthusiasm for the golden years of lithium – a yore not too distant from 2025 – remains strong. Shares popped nearly +10% in morning trades, retaining most of those into the early arvo on the back of $104M worth of trades sharing hands a/a 12.40pm AEDT.
“This first-of-its-kind investment by a major Korean company into Australian lithium is a milestone for our industry. It signals the growing global demand for Tier 1 hard rock lithium assets and the confidence international partners have in Australia’s ability to meet that demand,” MinRes chair Malcolm Bundey said.
MIN last traded at $51.40/sh.
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