Hancock Prospecting has increased stake in Liontown Resources leading to speculation on what competing mining giant Albemarle’s next move will be.

Hancock Prospecting (“Hancock”) has increased its stake in Liontown Resources (“Liontown”) from 10.7% to 12.3% in the last month, claiming it paid no more than A$3.0 (US$1.9) per share. The news comes after Hancock previously raised its stake in the company in September. Liontown Resources, which is developing the Kathleen Valley and Buldania lithium mineral projects in Western Australia, is currently entertaining a takeover offer from major lithium producer Albemarle for A$6.6Bn (US$4.3Bn). Crucially, if Hancock’s total shares in Liontown reach 15% it will be able to block the Albemarle takeover deal.

Hancock Prospecting is a mining giant, with a proven record of developing iron ore and coal projects and has recently taken stakes in other lithium developers such as Patriot Battery Metals and Delta Lithium. Albemarle is one of the largest lithium producers in the world, with a mixture of lithium facilities owned and operated outright and via joint ventures in both the lithium mineral and brine space. This latest development is symptomatic of the latest trend in battery material mergers and acquisitions. In light of concern over supply volumes, companies and countries are vying for control over the pool of new projects, particularly in the lithium space. Further compounding this supply shortage is the introduction of legislation such as the United States Inflation Reduction Act (IRA) or the European Union’s Battery Directive, which aims to promote supply chains originating from countries with close ties to these respective nations.

This current situation leaves uncertainty surrounding the next stages of development for Liontown’s Kathleen Valley and Buldania projects. Albemarle now has the opportunity to reconsider its offer for Liontown in an attempt to gain total ownership of the project. However, the company may feel that a joint venture or partnership with Hancock Prospecting over the Kathleen Valley and Buldania projects is a more amenable option. Albemarle has already increased its offer for Liontown once before, from AUD5.5Bn (US$3.7Bn), the possibility of a further increase is possible though may be less likely. Given Albemarle’s history with joint ventures in the lithium sector, especially in Western Australia, a partnership with Hancock Prospecting is the more likely scenario.