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Mineral Resources takes stake in Global Lithium, boosts battery metals exposure

Australia’s Mineral Resources (ASX: MIN) will pump A$13.6 million into fellow explorer Global Lithium Resources (ASX: GL1) as part of a A$30 million-placement that seeks to speed up exploration programs at Marble Bar and Manna lithium projects in Western Australia.

The move gives Mineral Resources 10.1 million shares or a 5% stake in Global Lithium. It also grants it access to early-stage lithium development assets in the Pilbara and Goldfields, where it already has existing operations.

Another 8.3 million shares were placed with institutional and sophisticated investors, the companies said, raising a further A$11.3 million.

Suzhou TA&A Ultra Clean Technology, the controlling shareholder of Yibin Tianyi Lithium Industry, is keeping its 9.9% interest in Global Lithium via a A$4.3 million placement.

“As Global Lithium continues to advance our growth strategy with a significant West Australian lithium portfolio in tier one locations, we are delighted to welcome Mineral Resources as a cornerstone investor in this capital raising,” non-executive chair Warrick Hazeldine said.

The company will spend the cash on further exploration and studies at the company’s flagship Marble Bar project and its recently acquired Manna project 100km east of Kalgoorlie.

Global was among the top five initial public offerings in Australia last year, after listing at 20 cents (Australian) in May, closing at 28 cents (Australian) after its first day of trade and ending the year at $1.13 a share.

Supply shortage

Global demand for lithium, as well as prices for the metal used in lithium-ion batteries for electric vehicles (EVs) continue to grow.

The EV industry will dominate demand for lithium in the coming years, accounting for almost three quarters of the battery metal’s consumption by 2030, up from 41% in 2020.

Chile, which has one of the world’s largest lithium reserves and hots the two biggest producers, sees lithium hydroxide taking the lead with about 56% of the total consumption versus 44% for carbonate by the end of the decade. This switch can be mainly explained by manufacturers’ growing preference for nickel-intensive cathodes, which tend to favour the use of hydroxide over carbonate, Chilean copper agency Cochilco said in a January report

Source: Rio Tinto’s Investor Seminar 2021. (Click for full size)

Demand associated with cell phones, computers and tablets and other consumer goods would reach 411,000 tonnes in 2030, compared with the 79,000 tonnes expected for this year.

The world’s second largest miner, Rio Tinto (ASX, LON, NYSE: RIO), which saw its lithium plans in Serbia crushed this year , sees EV sales accounting for up to 55% of the world’s total light vehicles sales as early as 2030, with about 65 million units. 

This means manufacturers would need about three million tonnes of lithium, compared with the roughly 350,000 tonnes they consume today.

Existing operations and projects combined, however, are slated to contribute one million tonnes of lithium, Rio Tinto has warned

recent report by the International Energy Agency (IEA) recommended governments start stockpiling battery metals, noting that lithium demand could increase 40-fold over the next 20 years. IEA executive director Fatih Birol said this would become an “energy security” issue.  

China dominates lithium processing, while mine supply largely comes from Chile and Australia.

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