China’s Tianqi Lithium to sell Australian unit to nickel firm IGO Ltd

Chinese mining giant Tianqi Lithium will receive a sorely needed cash boost after agreeing the sale of 49% of its Australian unit to nickel-gold firm IGO Ltd, for a sum of US$1.4 billion.

Through the deal, IGO – Australia largest independent nickel producer – will assume a 24.9% interest in the Greenbushes lithium mine in Western Australia and a 49% share in the Kwinana lithium hydroxide plant South of Perth.

The acquisition will be financed through debt, cash and an equity-raising, and is expected to be completed in Q2 of 2021. Lithium Holdco will be the exclusive partner for all lithium related investments for IGO and Tianqi outside of China, IGO said.

Greenbushes, which is 49% owned by US-based lithium giant Albermarle, is the world’s largest and lowest cost hard rock lithium mine with an output of 764,000 tonnes of spodumene concentrate in 2019.

Meanwhile, the first production train of Tianqi’s $700 million Kwinana lithium hydroxide plant has been completed and is expected to be commissioned in 2021.

The deal comes as a boon to Tianqi after it announced last month that it might not be able to repay $1.9 billion of debt due on December 28. The beleaguered miner has been plagued with balance sheet issues since it acquired a $4.1 billion stake in Chilean miner SQM in 2018. Lithium carbonate prices have dropped by more than 70% since the acquisition.

“This transaction also facilitates a recapitalisation of our balance sheet that will position us strongly for the expected recovery in the lithium sector,” Tianqi founder and chairman Jiang Weiping said.