The Chilean lithium producer and Australian mining conglomerate have agreed to offer US$1.1Bn for Azure Minerals as the trend of large-scale miners investing in lithium projects continues amid supply concerns.

Chilean lithium producer SQM and Australian mining conglomerate Hancock Prospecting (“Hancock”) have entered into a joint bidding agreement which will effectively provide SQM with a 37.8% voting stake in Azure Minerals. Azure Minerals is currently developing the Andover lithium project in Western Australia. This agreement has been made to allow the joint companies to acquire all of the fully paid ordinary shares in Azure Minerals, for which SQM and Hancock have offered a valuation of US$2.5 (AUD3.7) per share, valuing the company at US$1.1Bn (AUD1.7Bn). A further 23% of shareholders in Azure Minerals are expected to support the motion, meaning SQM and Hancock would become the majority shareholders in the mine developer.

This latest move comes amidst a flurry of acquisitions in the lithium space as large mining companies look to move into the sector as demand for lithium chemicals continues to be fuelled by electric vehicle (EV) demand. SQM had previously tried to acquire Azure Minerals in October 2023 but had been blocked by Hancock previously. With this joint bid, Hancock will retain it’s share while SQM removes a major obstacle to its acquisition plans and potentially gains a mining partner with significant infrastructure in the Pilbara region.

Azure Minerals is currently completing a preliminary economic assessment (PEA) for the Andover Lithium Project, located in the West Pilbara region of Western Australia (highlighted in the map below). The West Pilbara area, along with Western Australia as a whole, is currently host to a large number of lithium projects and producers. 

Project Blue estimates that Australia as a whole produced 74% of lithium mineral supply in 2023, and that 55% of total refined lithium supply originated from Australian mineral concentrates. Project Blue is currently tracking 60 Australian lithium projects and operations. With such a large volume of deposits being developed, close access to downstream customers, and favourable mining codes, Australia has become one of the most appealing locations for project acquisitions and Project Blue expects to see further instances of this in 2024. However, there are several other jurisdictions which are likely to offer similarly attractive investment opportunities over the next decade, these include the USA, parts of Europe, parts of Africa, and parts of South America, as countries and companies look to bring on new sources of lithium supply with similar deposit fundamentals and financials. While in the short term, Australia will continue to be the most favourable location for lithium mineral investment by larger players, Project Blue expects to see growing numbers of acquisitions in other parts of the World as more favourable deposits and projects are developed.