Two of Australia’s biggest banks, the country’s leading export credit agency, and a clean energy financier are backing billionaire Gina Rinehart’s favourite lithium miner Liontown Resources with a $550 million loan, signalling confidence in a pummeled sector.
Liontown chief executive Tony Ottaviano at the part-built Kathleen Valley mine in August.Credit: Evan Collis
Shares in Liontown jumped 10.4 per cent to $1.45 on news of the funding, although the stock is still well down from its soaring height of $3 when the miner was the target of last year’s high-stakes takeover by US chemicals giant Albermarle. Shares ended Wednesday up 5.7 per cent at $1.39.
Run by chief executive Tony Ottaviano, Liontown is nearing completion of its lucrative $1 billion Kathleen Valley high-quality hard-rock lithium deposit in the middle of Western Australia.
However, a global plunge in lithium prices – the metal dubbed “white gold” due to its market value and silver colour – has thrown the sector into turmoil and forced Liontown to review the mine’s expansion plans after its lenders pulled the plug on a $760 million debt package.
Earlier this year, the company said its syndicate of lenders remained “highly supportive” of Kathleen Valley and that it had started negotiations for a smaller revised debt centred around deferring parts of the mine’s expansion.
Gina Rinehart’s Hancock Prospecting is Liontown’s biggest shareholder.Credit: Bloomberg
China yuan currency prices for lithium spodumene have tumbled more than 80 per cent between November 2022 and now after demand for lithium batteries, the driving force behind the global electric vehicle wave, hit the shoals of slowing global EV customer growth.
China’s EV exports increased 50 per cent last year, with a large portion going to Europe. Global EV and hybrid electric vehicle sales grew by 35 per cent in 2023, according to Ev-volumes.com. However, sales were up 52 per cent the year before.
Mining magnate Gina Rinehart’s Hancock Prospecting is Liontown’s biggest shareholder.
Hancock spent nearly $1 billion to build a strategic 19.9 per cent blocking stake in October last year and thwart US giant Albermarle’s aspirations to seize control of the miner. Since then, the value of Hancock’s holding has halved as prices crushed the sector.
Liontown said the new debt arrangements will fund its mine until first production as well as the subsequent ramp-up to a “base case” output of 3 million tonnes a year. “The debt facility [also] provides financial certainty and sufficient time for Liontown to complete the previously announced review of Kathleen Valley’s 4 million megatonne annual output,” the company told the ASX.
The organisations syndicating the loan include Australia’s biggest bank, the Commonwealth Bank, National Australia Bank, French financial giant Societe Generale, Australia’s export credit agency Export Finance Australia, and the Clean Energy Finance Corporation.
Kathleen Valley remains on schedule and on budget to start first production by the middle of this calendar, the company said.
Meanwhile, other hard-hit lithium miners are paring back operations.
Core Lithium suspended long-promised works on its second BP33 mine near Darwin in December, blaming the global price crash in the metal, while the previous month, Chinese giant Ganfeng Lithium postponed plans to mine the battery metal in Mexico.
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