(Bloomberg) -- Australia's richest woman may be set to scupper a second lithium takeover in a matter of weeks, building a major stake in Azure Minerals Ltd. immediately after the miner backed a A$1.6 billion ($1 billion) bid from Chilean giant SQM.
Gina Rinehart's Hancock Prospecting Pty Ltd. said on Friday it now held 18% of Azure, just short of the 20% level that would require a mandatory takeover offer, but enough to challenge the current bid. Under the terms of its main offer structure, SQM can pull out if a single shareholder acquires more than 19% of the Perth-based miner — a major hiccup, even if other deal options remain.
Market speculation around Rinehart's involvement had swirled since SQM's improved offer went public on Thursday, driving up interest in the stock.
The combative iron ore billionaire earlier this month scuttled a bid for lithium miner Liontown Resources Ltd., by gradually building a 19.9% stake — ultimately enough to prompt Albemarle Corp., the world's largest lithium producer, to withdraw its A$6.6 billion offer, even after extended due diligence.
The flurry of deals in the lithium sector highlights the battery metal's crucial role in the energy transition. Many newly founded and previously little-known companies in Australia, where lithium mining is dominated by small and mid-sized firms, have surged as a result, as producers vie for a piece of one of the world's most promising resources.
While her ultimate gameplan is still unclear, Rinehart's lithium gambit underscores the structural challenges on the horizon for iron ore, the metal on which her fortune was built, as demand in China cools. It remains lucrative for the time being, however — earlier on Friday, Hancock's Roy Hill Holdings Pty said the company's cash flow from operations was A$3.3 billion in the year through June, much of which was paid out in dividends.
“You can see Hancock has intent to be involved in the lithium industry,” said Matthew Langsford, a portfolio manager at Terra Capital. “There's going to be greater competition for those assets that appear to have scale.”
Azure shares, which have surged since it reported promising drilling results at its Andover site in Western Australia in June, closed at A$3.50 on Friday, before the Hancock announcement. SQM's agreed cash offer amounts to A$3.52, a 44% premium to the undisturbed price on Oct. 20.
“While Andover shows good prospects, it has a long path and significant risks to navigate before its ultimate potential is known,” Hancock said in the statement, adding that it has “the capacity to support and expedite development.”
--With assistance from Annie Lee.
(Writes through, adds comments from portfolio manager in 7th paragraph.)
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