The Chilean-government run copper giant aims to enter the lithium market as the world pushes for carbon-free technologies
On Thursday, Codelco agreed to acquire Lithium Power International (LPI) (ASX: LPI) through a process regulated by the Australian Court of Justice called a Scheme of Arrangement. The offer includes payment of A$0.57 per share, which implies a valuation of A$385 million, or the equivalent of USD$244 million.
LPI possesses the Maricunga lithium project, also recognized as Project Blanco, situated adjacent to Codelco’s mining assets within the Maricunga Salt Flat. This agreement marks Codelco’s first foray into lithium acquisition, duly approved by its board of directors in alignment with the National Lithium Strategy, as declared on April 20, 2023.
“The acquisition of LPI is a logical consolidation within the Maricunga Salt Flat lithium landscape and positions us even further in our strategy to become a supplier of critical metals of global relevance to enable the energy transition and meet the National Lithium Strategy,” said Máximo Pacheco, Chairman of Codelco’s board of directors.
The copper company will use its extensive mining experience and strong financial resources to enhance the project’s value and reduce risks during the development phase. This strategy takes into account advantages like its deep understanding of and proximity to the Atacama Region, where its Salvador Division is operational.
In line with the typical timeline for a process of this kind, it is anticipated that LPI’s shareholders’ meeting will hold a vote on the transaction towards the end of January 2024.
Should it receive approval from both shareholders and the court, the transaction will be promptly executed. LPI’s board of directors, including its primary shareholder, have unanimously endorsed the agreement and recommended its approval by the shareholders.
“The acquisition of LPI will enable the Blanco Project through synergies with Codelco’s assets and permits in the Maricunga Salt Flat and, in this way, develop a globally prominent lithium project with exceptional sustainability credentials,” Pacheco said.
“The expectation is that it will generate value for both Codelco and our country and region, especially for neighboring communities.”
Pacheco emphasized the strategic nature of this purchase, highlighting its potential to generate value for both Codelco and Chile. He sees it as a move that positions Codelco as a significant player during the energy transition, recognizing that copper and lithium, both critical minerals, play complementary roles in this global effort.
Codelco plans to finance the acquisition using its internal funds.
Lithium Power International $LPI proposed takeover from Codelco: @business.
LPI has traded above the offer price of ~$0.50c during times of higher lithium prices and optimism.
Bodes well for the space, $LTR takeover still pending and lots of beaten-up juniors out there. pic.twitter.com/XYFxO9nD62
— Jack Howe (@JackHoweCFA) October 11, 2023
Read more: Lithium South Development expands production goals, updates PEA on Hombre Muerto lithium project
Read more: Lithium South Development updates leadership roster, appoints new director
The Lithium Triangle holds some of the largest deposits in the world
Lithium is at the heart of the widespread adoption of electric vehicles (EVs), energy storage systems vital for powering grids, and the batteries that power portable devices like laptops and cellphones. As a result, the significance of the ‘Lithium Triangle’ countries, namely Argentina, Bolivia and Chile, has risen significantly, as they collectively possess a substantial portion of Latin America’s estimated 60 per cent share of global lithium reserves.
This expanse, which includes the Salar de Uyuni in Bolivia, the Salinas Grandes and Hombre Muerto salars in Argentina and the Salar de Atacama in Chile, holds some of the world’s largest known lithium deposits.
Codelco operates on the Chilean side of the triangle next to some of the largest lithium companies.
Albemarle Corporation (NYSE: ALB) and Sociedad Química y Minera de Chile S.A (SQM) (NYSE: SQM) both operate in the Salar de Atacama in Chile. Meanwhile, Livent Corporation (NYSE: LTHM) has lithium production facilities in the Salinas Grandes salt flat in Argentina and has played a role in supplying lithium for various applications, including EV batteries and renewable energy storage systems.
Recent acquisitions by lithium giants have reduced the number of junior players operating in the area.
This included Neo Lithium Corp which was acquired by Chinese-based Zijin Mining Group Co. Ltd (SHA: 601899) in early 2022 and Lithium Americas Corp (NYSE: LAC) (TSX: LAC) which also bought Millennial Lithium Corp. in 2022
Lithium South Development Corporation (TSXV: LIS) (OTCQB: LISMF) (Frankfurt: OGPQ) is among the more prominent juniors operating in the triangle. It is currently preparing its updated preliminary economic assessment for its Hombre Muerto lithium project in Argentina.
The move comes after the company expanded its lithium brine resources by 175 per cent last month.
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Lithium South Development Corporation is a sponsor of Mugglehead news coverage.
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