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UPDATE 3-Australia's IGO to buy stake in Greenbushes lithium mine from Tianqi - sources

Published 07/12/2020, 07:54 pm
Updated 08/12/2020, 04:00 am
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* Tianqi has until Dec. 28 to repay or refinance $1.9 bln in loans

* Price on IGO deal expected to be just under A$2 billion -sources

* Deal involves Greenbushes, Kwinana processing plant -source (Adds Albemarle statement)

By Paulina Duran

SYDNEY, Dec 7 (Reuters) - Australian nickel-gold miner IGO Ltd IGO.AX is in negotiations to buy a minority interest worth close to $1.5 billion in a vehicle holding Tianqi Lithium Corp's 002466.SZ stake in the Greenbushes lithium mine, sources told Reuters.

China's Tianqi, one of the world's top producers of lithium chemicals used in electric-vehicle batteries, urgently needs proceeds from the sale to make loan repayments that were due at the end of November. IGO, which has requested a trading halt for its shares until Wednesday, pending a material acquisition, did not immediately respond to a request for comment.

Tianqi, whose shares rose as much as 8.9% on Monday to their highest since July, said in a filing after the market close that a wholly-owned subsidiary was planning to raise capital and expand its issued share capital but that no legally binding financing agreement had yet been signed. Tianqi, which alongside Albemarle Corp ALB.N operates Greenbushes - the world's largest hard-rock lithium mine - in Western Australia, last week secured a one-month reprieve on $1.88 billion of loan repayments used to acquire a 23.8% stake in Chile's SQM SQMA.SN in 2018.

The IGO acquisition includes a stake in Greenbushes, both sources said, with the second source adding it also included other assets, mostly in Australia.

A price has not been agreed but was expected to be slightly below A$2 billion ($1.48 billion), both sources said, asking not to be identified because the details of the deal were private and had not been signed.

The second source said the deal was expected to be structured as a joint venture in Tianqi unit Tianqi UK and include both Greenbushes and Tianqi's suspended Kwinana lithium processing plant in Australia.

That would bypass Albemarle's pre-emption rights, the source said, adding that Tianqi would retain control of the vehicle.

Charlotte, North Carolina-based Albemarle said it would not discuss "another company's process or comment on market speculation." Albemarle has said it wants full control of Greenbushes. is our partner and we are following the situation closely," Albemarle spokeswoman Hailey Quinn said in an emailed statement on Monday.

Some analysts think China would not allow a strategic resource base like Greenbushes to fall into foreign hands.

"Greenbushes is a large, low-cost asset and has contributed to China's lithium supply security," said Alice Yu, research analyst at S&P Global (NYSE:SPGI) Market Intelligence.

Tianqi UK, which holds Tianqi's 51% in Greenbushes, has changed its name to Tianqi Lithium Energy Australia Pty Ltd, according to a separate filing.

IGO will fund its purchase with existing cash and debt, while Macquarie Capital and Citigroup (NYSE:C) are advising on a potential capital raising that would partly fund the deal, the second source said.

Private-sector Tianqi's debt jitters have occurred at a time when defaults among China's usually gilt-edged state-owned enterprises have left the country's bond market on edge.

Earlier this year, Tianqi appointed Australia-based advisers Grant Samuel to find a buyer for the Greenbushes stake, while Standard Chartered (LON:STAN) is advising IGO, both sources said.

($1 = 1.3461 Australian dollars)

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