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Is Chris Ellison’s MinRes buying Patriot Battery Metals?

Tom Richardson
Tom RichardsonJournalist
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Chris Ellison’s $16.9 billion iron ore and lithium producer Mineral Resources said via a spokesman it couldn’t comment on reports in The West Australian on Friday that it’s building a stake in Canadian lithium explorer Patriot Battery Metals.

Patriot Battery Metals didn’t respond to a request for comment on the report. The explorer has a primary listing in Toronto and issued chess depositary instruments (CDIs) on the ASX in December at 60¢ that have since raced to $1.67 on a market value about $1.8 billion.

Ken Brinsden, the former CEO of lithium miner Pilbara Minerals, is now chairman at Canadian explorer Patriot Battery Metals. Trevor Collens

After the report of Mr Ellison’s interest was published, shares in Patriot’s Toronto listing advanced another 8.4 per cent to a record closing high of $C16.20 on Friday. Patriot’s Australian chairman Ken Brinsden is the former chief executive of Pilbara Minerals and oversaw its 17-fold rise into a $5 billion lithium giant after taking the reins in 2016.

In January, broker Macquarie said drilling results showed Patriot Battery Metal’s Corvette lithium spodumene tenement in Quebec, Canada, was similar in high-grade quality to the world-leading Greenbushes Mine in Western Australia owned jointly by IGO, Albemarle and Chinese investors.

Confirmation of an investment by renowned battery metals deal maker Mr Ellison will fuel rumours of a planned sharemarket float of MinRes’ lithium assets to milk record-breaking prices and surging sector interest among US investors.

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A September report in The Australian Financial Review revealed that MinRes and its JPMorgan bankers had looked at spin-off structures.

Hot strategic assets

Last October, Canada’s government effectively moved to ban Chinese investment in the nation’s lithium assets, amid North America struggles to narrow China’s huge lead in the race to secure raw material supplies for the clean energy transition.

As a result of Ottawa’s ban, ASX-listed lithium junior Winsome Resources bought a $2 million stake in Vancouver-based Power Metals from China’s Sinomine Rare Metals, after it was among a number of Chinese miners forced to divest lithium holdings.

On December 2, Australia’s Resources Minister Madeline King released a discussion paper on the future of Australia’s critical minerals industry. The Australian lithium sector has historically taken heavy investment from Chinese interests.

However, on November 30, Ms King stopped short of confirming the government was looking at curbs on Chinese investment in critical minerals based on national security, and acknowledged Chinese companies were important partners in developing resources projects in Australia.

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Also, on November 30, the Albanese government introduced legislation to establish a $15 billion National Reconstruction Fund (NRF) mandated to invest in areas including battery supply chain development.

In the US, President Joe Biden’s executive announced its Inflation Reduction Act and threw $590 million in potential grants at ASX-listed, US-based battery supply chain players Novonix and Syrah Resources last October.

In the fast-moving space, MinRes already has a partnership with US lithium investor Albemarle after it struck an October 2019 deal that resulted in it selling a 60 per cent interest in its Wodgina spodumene mine to Albemarle for $US1.3 billion. It also stipulated the transfer to MinRes of a 40 per cent interest in two lithium hydroxide conversion trains built by Albemarle in Western Australia.

Tom Richardson writes and comments on markets including equities, debt, crypto, software, banking, payments, and regulation. He worked in asset management at Bank of New York Mellon and is a member of the CFA Society of the UK as a holder of the Investment Management Certificate. Connect with Tom on Twitter. Email Tom at tom.richardson@afr.com

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