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Billionaire Gina Rinehart has built up a strategic stake in Australian lithium developer Azure Minerals, threatening to scupper a second takeover involving the battery metal in a matter of weeks.
Chilean miner SQM said this week it had agreed to buy out Azure at an equity valuation of about $1bn. SQM, the world’s second-largest lithium producer, had bought a stake of almost 20 per cent in Azure in January to diversify beyond its home market.
However, Rinehart’s Hancock Prospecting said on Friday it had acquired 19 per cent of Azure Minerals, just below the threshold at which it would have to make a full offer — repeating a tactic used to foil another deal in the sector in recent weeks.
Albemarle, the world’s largest lithium producer, walked away from a $4.2bn deal this month to buy Australian lithium mine developer Liontown Resources after Rinehart built her shareholding to 19.9 per cent.
Rinehart built her fortune in iron ore before expanding her business empire into agriculture. She now has her sights set on lithium, which is used in most electric vehicle batteries and has become one of Australia’s most important growth exports, but it is unclear what her strategy is having intervened in two bid situations.
Hancock said its investment focus was “long term” and said it had a “history of successful domestic and international partnerships” after revealing the stake purchase in Azure.
One banker in Australia said Rinehart “clearly wants a seat at the table” in the Western Australian lithium market as she diversified. SQM’s offer price was high for an early-stage lithium prospect, showing the Chilean company’s confidence in its worth and miners’ appetite for more lithium capacity, the banker said.
Azure Minerals owns 60 per cent of the Andover lithium project in Western Australia’s Pilbara region, which is still in its exploration phase and will need several years to bring into production.
Two years of booming lithium prices have boosted producers’ balance sheets and spurred acquisitions. However, since the start of the year, lithium prices have dropped more than 70 per cent, leading to a decline in valuations.
SQM is under pressure in its home country Chile, where the government has unveiled plans for a national lithium strategy to give the state greater control over resources.
The company is in talks with state-owned copper mining group Codelco about renegotiating its agreement for the world’s best lithium resources in the Salar de Atacama, which is set to expire in 2030.
The Chilean group already has a presence in Australia through its joint venture with local conglomerate Wesfarmers to develop the Mount Holland lithium project.
Azure Minerals and SQM declined to comment.