Lithium games with a diplomatic twist in Australia

First part of these unusual events was aired here last week when Mining Journal reported that the Bald Hill mine was emerging from almost four years trapped in court ordered administration after its original owner collapsed.The second part followed three days later when US lithium leader Albemarle boosted its takeover offer for Liontown, an emerging Australian producer of the battery metal, to A$3 a share, valuing the one-time penny dreadful (A7 cents three years ago) to A$6 billion.On the same day that Albemarle increased its offer for Liontown (September 4), Rob Kirman from insolvency specialist McGrath Nicol, the administrator of Bald Hill's owner, Alita Resources, said he had had signed an implementation (sale) agreement with Australia's Mineral Resources.That arrangement could face a legal challenge because the loser in the Bald Hill/Alita saga looks to be the Chinese-controlled Austroid Corporation which had planned to take control of Alita by converting debt to equity - until the proposal was rejected mid-year by the Australian Government.Media reports speculateA national newspaper, The Australian, reported that it had seen a secret agreement by which Austroid agreed to sell lithium concentrate (spodumene) to a related Chinese company at prices ranging from US$800 a tonne to $1500/t at a time when the market price was $6000/t.That deal is believed to have alerted Australian authorities which keep an eye on transfer pricing (selling below market to an associated entity) who ruled against Austroid, clearing the way for Bald Hill to be sold to Mineral Resources.A third part of the latest rush for lithium assets is an as yet unconfirmed report that Australia's richest person, iron ore heiress Gina Rinehart, has dealt herself into the Liontown game with the purchase of a 10% stake in the stock.Investors appear to believe that Rinehart, or someone other than Albemarle, is active in the Liontown market which rose to A$3.05 earlier today, slightly above Albemarle's offer of A$3 which has been accepted by the Liontown board subject to a higher offer being made.Geopolitics keyThe fight for Bald Hill comes at a delicate time on two fronts. Firstly, because the Australian Prime Minister, Anthony Albanese, yesterday accepted an invitation to visit Beijing, potentially making him the first Australian leader to make the trip in seven years.A fractious relationship between Australia and China led to a trade embargo being placed on some Australian exports, accompanied by a blizzard of Chinese insults.Today, with China hurrying to rebuild damaged trading relationships as its economy slows the last thing politicians (on either side) want is fresh business brawl which is possible given the optics of a Chinese company with lithium interests having investment proposal rejected while an American lithium company is welcomed.Layered over all that is speculation that a game of consolidation is being played in the lithium rich country south of Kalgoorlie in Western Australia where Bald Hill is located along with at least five other emerging projects.Mineral ResourcesKey player in the attempt to create a dominant regional lithium star is Mineral Resources, the approved (but not yet legally certified) buyer of Bald Hill.Mineral Resources, which also has iron ore and mine services interests, is a partner with Albemarle in several lithium projects, providing the earthmoving expertise while the American company supplies the chemical know-how.Jarden, a New Zealand-based investment bank with growing Australian interests, said in a research note this week that it was "intrigued" by the agile approach of Mineral Resources to business development.The Jarden note, headlined "Marauders Map" asked whether Mineral Resources could "consolidate the Kalgoorlie lithium industry?"Interests held in the region by Mineral Resources include a stake in the Mt Marion mine, 75 kilometres from Bald Hill, along with interests in a number of small lithium explorer/developers, including Delta Lithium, Global Lithium and Essential Metals.Jarden doesn't answer its question about Mineral Resources making a consolidation play for the region south of Kalgoorlie, nor does it see the company as an attractive investment with a sell recommendation on the stock and a price target of A$45.90, well below last sales at A$69.23.

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