The Mineral Resources Ltd (ASX: MIN) share price is trading lower on Thursday.
In morning trade, the mining and mining services company's shares are down 1.5% to $82.61.
Why is the Mineral Resources share price falling?
Investors have been selling down the Mineral Resources share price today after broad market weakness offset the release of an update on the company's lithium operations.
According to the release, the company has entered into binding agreements with lithium giant Albemarle Corporation (NYSE: ALB) for two separate transactions.
The first transaction is for a restructure of its arrangements relating to the existing MARBL Joint Venture, which will see Mineral Resources' ownership of the Wodgina mine increase from 40% to 50%.
However, in exchange, Mineral Resources will reduce its ownership of the first two trains of the Kemerton Lithium Hydroxide Plant from 40% to 15%.
Conversion arrangement
The two parties have also committed to convert their respective share of Wodgina spodumene concentrate into lithium battery chemicals through Albemarle-owned conversion assets or using third party tollers.
Each party will fund their proportionate share of the cost of the conversion assets, with conversion cost payments to be made in stages. Mineral Resources will make an initial US$350 million payment immediately following receipt of regulatory approvals for the Wodgina and Kemerton restructure, with other payments to be made as conversion capacity is developed and provided.
In addition, Albemarle will supply Mineral Resources' 15% share of spodumene concentrate for use by Kemerton from the Greenbushes mine. The company will pay the benchmark price for its share of Greenbushes spodumene concentrate.
Downstream Joint Venture
Finally, Mineral Resources and Albemarle have committed to jointly own lithium conversion assets, which will convert Wodgina spodumene concentrate into lithium hydroxide or lithium carbonate, up to a nominal capacity of 100ktpa. This is subject to receipt of required regulatory approvals.
If all goes to plan, Mineral Resources will acquire a 50% interest in Albemarle's 100% owned Qinzhou and Meishan plants in China.
'World-leader in lithium mining'
Mineral Resources Managing Director, Chris Ellison, was very pleased with the agreement. He said:
We are delighted to have reached these binding agreements, which cement MinRes' place as a world-leader in lithium mining and leverage our partner Albemarle's strong track record in battery chemical production.
We also continue to study options to invest in capacity for future downstream lithium production in Australia. By growing our battery chemicals business and expanding into global chemical marketing, MinRes will become one of the world's largest fully integrated lithium chemical suppliers to auto manufacturers, capitalising on the increasing demand for sustainable battery mineral products.
