Mineral Resources Limited (ASX: MIN) has finalised a binding cooperation agreement with the South Korean company POSCO Holdings to create a joint venture of substantial scale. The signing of this agreement is a turning point in the lithium industry in Australia as it aligns with the ever-increasing global demand for first-class lithium resources.
MinRes and POSCO form a major joint venture boosting Australian lithium.
What Does The Mineral Resources POSCO Partnership Include?
A new joint venture will be formed, and POSCO Holdings will become the co-owner of 30% of Mineral Resources’ lithium business. The new company will be entitled to the whole 50% of MinRes’ share in the Wodgina and Mt Marion lithium mines. The total of this deal is US$765 million (about $1.2 billion). At this rate, the value of MinRes’s 50% share in the mines would be approximately $3.9 billion.
As per the deal, MinRes will keep a 70% stake in the company, which translates to 35% at the underlying level. The two mines, Wodgina and Mt Marion, will be operated by MinRes, ensuring that the company’s skilled miners will continue to be the ones in charge of the project.
How Will The Partnership Strengthen The Lithium Supply Chain?
The collaboration between Mineral Resources and POSCO is aimed at improving the global lithium supply chain. A part of the spodumene concentrate that is equivalent to the 30% share of POSCO will be given to the company. This share will be used by the company to support the gradually developing metal conversion projects, which are aimed at producing battery-grade materials for the markets of Korea and the West.
The partnership not only brings together MinRes’ mining skills and POSCO’s chemical processing but also contributes to Australia’s sustainable lithium production. It also strengthens the connection between Australia and Korea in the critical minerals industry, thus contributing towards global supply chains’ diversification in the face of increasing demand for clean energy materials.
The MinRes-POSCO partnership boosts the lithium supply chain and battery material production.
Why Is This Deal A Milestone For Lithium Production In Australia?
MinRes Chairman Malcolm Bundey characterised the agreement as a “first-of-its-kind investment by a large Korean company into Australian lithium.” He pointed out that it reflects the world’s trust in Australia’s capacity to provide lithium of great reliability.
Bundey further mentioned that the collaboration would layer the global conversion capacity as well as make the continent more favoured in the development of critical minerals. The merger reveals the country’s rising power in lithium markets at a time when worldwide production of electric vehicles (EVs) is soaring.
What Are The Financial And Strategic Benefits For MinRes?
For MinRes, this transaction is a sign of both the financial power and the strategic wisdom. The amount from POSCO’s investment will be used to pay off some of their external debts and utilise the company’s assets to their fullest. The partnership is also in line with MinRes’ ongoing efforts to recycle its capital through international partnerships so as to raise funds for the next stage of its growth.
MinRes Managing Director Chris Ellison stated that the deal would “substantially bolster MinRes’ balance sheet” and allow the company to be more flexible in pursuing its strategic expansions. He further emphasised that the agreement acknowledges the long-term worth of Wodgina and Mt Marion, which are regarded as the best of the world’s hard rock lithium resources.
Chris Ellison says the deal boosts MinRes’ growth and recognises world-class lithium assets.
How Does POSCO Benefit From This Partnership?
POSCO Holdings CEO In Hwa Chang commented that this collaboration is in line with the POSCO Group’s strategy to ensure a stable long-term raw material supply. He added that working together with MinRes is an indication of POSCO’s trust in MinRes’s ability to operate efficiently and the lasting quality of its assets.
The know-how and techniques of POSCO in the downstream sector, along with the mining operations of MinRes, make it possible for both companies to increase their contribution to the global battery materials industry sustainably. Furthermore, this partnership is likely to facilitate the shift towards environmentally friendly transportation solutions.
When Will The Deal Be Completed?
Both companies’ boards have given their approval for the merger. However, this deal is still pending various regulatory approvals, one of which is the Foreign Investment Review Board and also potential merger clearances. It is therefore anticipated that the deal will be finalised by the end of 2026. The cooperation between the two companies, once it is through, will change the whole lithium production landscape in Australia and will also make it more difficult for the country to lose its position as the leading one in critical mineral development worldwide.
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FAQs
Q1. What is the value of POSCO’s investment in MinRes’ lithium business?
POSCO Holdings will invest a total of US$765 million (approx $1.2 billion) to own 30% of MinRes’ lithium operations.
Q2. Which lithium assets are included in the partnership?
The agreement includes MinRes’ current 50% stake in the Wodgina and Mt Marion lithium mines.
Q3. When will the transaction be completed?
The merger is anticipated to be completed by the middle of 2026, after obtaining necessary regulatory approvals.
Q4. How will this affect the lithium supply chain in Australia?
Australia’s role in the lithium supply chain will be enhanced by the partnership, which will provide a steady spodumene production as well as global market diversification.
