The value of billionaire Chris Ellison’s mining company jumped by nearly $400 million after it announced a deal to sell a 30 per cent stake in its lithium operations to South Korean steel giant POSCO.
Mineral Resources (MinRes), a West Australian mining, energy and services company founded and run by Ellison, owns a 50 per cent share of the lucrative Wodgina and Mt Marion lithium mines in Western Australia.
Chris Ellison
The company said its $1.2 billion cash deal with Seoul-based POSCO for a 30 per cent share of its lithium operation values its 50 per cent ownership of the lithium operation at $3.9 billion. It says it will use the $1.2 billion to repay debt, fortify its balance sheet and position itself for growth.
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MinRes controls a half share of Wodgina, 90 kilometres south of Port Hedland, in a joint venture with US-based Albemarle Corporation and China’s Jiangxi Ganfeng Lithium holds the other half of Mt Marion, a mine about 50 kilometres southwest of Kalgoorlie, not owned by MinRes.
Shares in the miner shot up 10 per cent in morning trade to $52 around midday before backing off slightly as investors green-lighted the embattled miner’s dealmaking.
Ellison’s leadership of MinRes has been under fire since revelations he used offshore entities to avoid disclosing revenue to the Australian Taxation Office plunged the miner into crisis management, a matter he described as a “serious lapse of judgment”.
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The board said in November last year Ellison will step down in 18 months from the company he founded nearly 20 years ago as part of an “orderly leadership transition,” despite his desire to remain in the role.
The miner has also faced, along with other major Australian iron ore and lithium producers, a decline in commodity prices as geopolitical tensions between America and China roil markets.
As part of the investment, POSCO will receive spodumene concentrate from the mines, underpinning its future investment in new downstream processing facilities.
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