Albemarle聽(NYSE: ALB) it was mulling a possible acquisition of all or part of Tianqi鈥檚 stake in Greenbushes mine in Western Australia, which is the world鈥檚 largest hard-rock lithium operation.
Discussing , the US-based lithium miner鈥檚 chief executive, Kent Masters, told investors its company was 鈥渋nterested鈥� in Tianqi鈥檚 controlling stake in Greenbushes. 鈥淲e鈥檙e following it,鈥� he said.
Masters added that Albemarle, the world鈥檚 top producer of the key commodity for the batteries that power electric vehicles,聽would base any decision on the matter on current market conditions.
The company operates in Chile鈥檚 Atacama desert, the world鈥檚 largest source of lithium from brine.
By gaining full control of Greenbushes, Albemarle would add a different kind off lithium mine (hard-rock, as opposed to brines) to its portfolio
By gaining full control of Greenbushes, Albemarle would add a different source of lithium to its business 鈥� one closer to the Chinese market than its mines in Chile.
The Charlotte, North Carolina-based miner would also cement its position as leader in the global lithium market.
Albemarle already holds a 49% stake in Talison Lithium, a partnership with Tianqi, which is the operator of Greenbushes mine, located about 250 km from Perth.
Tianqi Lithium, China鈥檚 top producer of the battery metal, warned in April it would soon have to take aggressive measures, including stake sales, to pay back over $6 billion in accumulated debt.聽
The Shenzhen-listed miner invested heavily over the past two years in an ambitious global expansion plan aimed at securing its leadership in the lithium market. Its actions put China in a dominant position just as sales of electric vehicles (EVs) began to take off.
Market challenges
A recent collapse in lithium prices, however, have thwarted Tianqi鈥檚 plans聽and those of its rivals.
Ganfeng Lithium said in an earnings alert last month it expected first-quarter net profit to fall 96-97% year-on-year.
Chile鈥檚 Chemical and Mining Society (SQM), the world鈥檚 second-largest producer of the metal,聽has pushed back a key expansion聽at its Atacama salt flat operations from the end of 2020 to late 2021.
Canadian lithium miner Nemaska Lithium (TSX: NMX), which was backed by Japan鈥檚 SoftBank,聽filed for聽bankruptcy聽protection聽in December.
Albemarle itself has had to adjust plans. It聽postponed last year a project to add about 125,000 tonnes聽of processing capacity. It also revised a聽deal to buy into Australia鈥檚 Mineral Resources鈥� (ASX: MIN) Wodgina lithium mine and said it would delay building 75,000 tonnes of processing capacity at Kemerton, also in Australia.
The lithium giant showed , cutting its 2020 budget and pulling its annual forecast amid the global spread of the coronavirus.
It was the first concrete signs that the lithium industry is beginning to feel the pain of falling EVs sales, which are projected to slide further for the rest of the year due in part to shutdowns affecting carmakers.
Before the pandemic, the main factor behind the price slump was an聽avalanche of new supply. The glut was triggered mainly by mine expansions and a cut in government subsidies for purchasers of EVs in China, the world鈥檚 largest market.