Graphite market facing dual supply challenges

Natural graphite production ballooned in 2022 when global mined supply reached 1,680,000 metric tons, a 73.9 percent increase from 2020’s 966,000 metric tons.

Global output registered a small 4.6 percent decline in 2023 totaling 1,600,000; however, the reduction was enough to send the market into deficit.

According to Tony Alderson senior analyst for Benchmark Mineral Intelligence the shortfall has been attributed to rising demand from the battery anode segment.

“EV demand is set to rise by nearly 400 percent over the next decade. As such, the need for both natural and synthetic graphite is rising notably in line with this,” Alderson wrote in an email. “With regards to this increased demand, the natural graphite balance is already not holding up with a 2024 deficit of nearly 150,000 metric tons per annum (tpa) emerging.”

Conversely the synthetic graphite market is experiencing a supply glut.

“On the side of synthetic graphite, it is fairing a little better when talking about the market balance as supply is stronger. The market is in a notable oversupply of 350,000 tpa, which is set to reach a deficit beyond the end of the decade,” he explained. “One of the reasons for this chemistry disparity is due to the greater supply and ease of building a facility in a far less time period than with natural.”

Although the 2025 supply narrative is different, the future of both markets looks similar, Alderson noted.

“Despite this, the currently announced supply is simply not enough to meet the forecasted demand out to 2034, with both [segments] reaching deficits of over 600,000 tpa which are only set to widen out to 2040,” he said.

In a 2022 report from Benchmark it is noted that some 300 new mines are needed to support the energy transition, a percentage of which will need to be graphite mines.

“We forecast battery sector demand for raw material graphite to rise by more than 1,400 percent between 2020 and 2050,” the report read. “By the end of the forecast period, total graphite demand could be three times the 2021 supply level.”

Shifting battery chemistries complicate forecast

Use in the EV sector is underpinning graphite demand, however as battery chemistries continue to shift market supply and demand fundamentals could also change.

The rapid evolution of battery chemistries has posed significant challenges. While the shift in cathode materials from nickel ternary (NMC) to lithium iron phosphate (LFP) in China has garnered much attention, similar transformations are also occurring within the anode market, explained Willoughby.

“China now primarily uses synthetic graphite anode materials as it’s faster to build out new production and easier to get the raw materials,” he said. “However, that has led to a massive oversupply for synthetic due to the number of new companies in the market, and in the natural [graphite market] demand has really fallen away in the last year.”

While NMC cathodes and natural graphite anodes are still quite popular outside of China, slower demand growth in 2024 has seen many of the major anode producers cut back output, he added.

Looking more long-term, Willoughby admitted the market could become opaque.

“It’s been a challenge to keep the ever-evolving supply and demand dynamics in check, particularly when the market has to increasingly consider regional regulations like the Inflation Reduction Act,’ he said. “We see China continuing to operate at a surplus over the next decade because of its existing capacity, but the rest of the world still looks to need more capacity for both natural and synthetic anodes if it wants to meet its own demand.”

This position was reiterated by Benchmark Intelligence’s Alderson who referenced the mounting geopolitical tensions between the East and West as a pain point in the long-term ex-China market buildout.

“China dominates not only natural graphite production (76 percent) but also downstream markets, controlling 79 percent of natural graphite anode and 98 percent of synthetic graphite anode supply globally,’ he said. “This highlights that the deeper into the supply chain you go, the more entrenched China’s dominance becomes. They form the backbone of the anode supply chain, and it will be a challenge for the West to break.”

Alderson pointed to China’s December 3, 2024, implementation of an immediate ban on dual-use exports intended for US military applications, along with heightened end-use reviews for exports like graphite to the US.

Building a North American supply pipeline

To offset Chinese control, the US has taken notable steps to onshore supply.

“Since the US IRA’s announcement in August 2022, over 500,000 tpa of anode capacity has been added, over a 200 percent+ increase,” said Alderson.

This move has been supported by government funding.

In November, 2023 South Star Battery Metals (TSXV:STS,OTCQB:STSBF), received a US$3.2 grant from the Department of Defense (DoD) under the IRA to advance its flagship BamaStar graphite project in Alabama.

Similarly, Graphite One’s (TSXV:GPH,OTCQX:GPHOF) Alaska-focused subsidiary was the recipient of a US$37.5 million DoD grant in July of 2023, to cover costs associated with “accelerated Feasibility Study” on its name sake project.

In September of the same year, the company penned a US$4.7 million contract with the DoD’s Logistics Agency to develop a graphite and graphene-based foam fire suppressant as an alternative to incumbent PFAS fire-suppressant materials, as required by US law.

“Private companies are also ramping up onshoring efforts by inking offtake agreements with U.S. anode producers, setting a record in 2024 for such deals,” said Alderson.

“Despite these advancements, North America faces a 200,000 tpa market deficit in 2024, expected to grow as EV demand accelerates. As such, notable investment will be required to drive growth and achieve any form of self-sufficiency,” he added.

As new North American supply becomes imperative, the sole continental producer Northern Graphite (TSXV:NGC,OTCQB,FRA:0NG), faced challenges in the low-price environment of 2024.

“While we are also moving forward to open a new pit at the Lac des Iles (LDI) and restart the plant at a higher throughput in January to meet rising demand, unless we can see our way through to higher prices, long-term supply agreements with battery makers and support from governments in Ontario, Quebec, Canada and/or the United States, the Company will continue to struggle whilst these challenging market conditions prevail for ourselves and the rest of the industry,” Chief Executive Officer Hugues Jacquemin said in the Q3 update.

To aid in offsetting these pressures, Northern Graphite was able to negotiate a price increase with its customers in early January to mitigate inflation and higher production costs.

Trends to watch in 2025

As 2025 progresses both market experts offered insight on which trends could be the most impactful to the market.

“We’re expecting more bifurcation of the China and ex-China markets,” said Wood Mackenzie’s Willoughby.

“In 2024, we saw domestic Chinese prices sink much more rapidly and to a greater extent than export prices,” he said. “We expect them to remain low in 2025, but for US and European benchmarks to begin to climb again as the shift away from China as their major supplier creates tightness in that market.”

The sheer volume needed in the North American market is likely to provide price insulation for graphite produced outside of China.

“Given the relative lack of ex-China mines, new production isn’t expected to dent this outlook too much,” he added.

For Alderson, volatility will reign supreme in the first half of 2025.

“Excess inventory overhang of battery-grade -100 mesh is expected to sustain high supply levels through 2025 despite forecasted reduction in production costs within the Chinese market,” he said. “Consequently, prices are forecasted to decline further in H1 2025, averaging US$413 per metric ton, down 22 percent year-over-year.”

He sees more stability materializing in the latter half of the year.

“In H2 2025, prices are set to recover moderately as inventories shrink and stock levels normalise with China’s overall production experiencing a gradual recovery,” he said. “However, ongoing competition from synthetic graphite for battery end use applications, will likely cap price growth.”

Projected demand growth

Critical minerals have become a key focus of several nations looking to secure their energy transition efforts and fortify domestic supply chains. The cobalt sector’s production concentration in the Democratic Republic of Congo (DRC), makes it even more prone to geopolitical upheaval.

According to the International Energy Agency’s (IEA) 2024 Global Critical Minerals Outlook, the cobalt market has a heightened geopolitical risk rating because 84 percent of production is focused in a singular country.

Despite the current glut, the IEA is also projecting that demand will soar from 213,000 metric tons in 2023, to 344,000 metric tons in 2030 and 454 metric tons in 2040.

This steep uptick has also prompted the IEA to project a potential 16 percent shortfall by 2035.

Although countries like Indonesia and Australia are starting to see growth in their cobalt sector, the DRC will continue to be the dominant player.

“The DRC is going to maintain its position for the foreseeable future, however, Indonesian MHP is rapidly growing as an alternative source of cobalt in the market. In line with this, we’ve seen an influx of cobalt metal from Indonesia becoming more prevalent in recent months, being aggressively marketed by Indonesian producers,” said Aubry.

However, a lack of expansion in the DRC’s cobalt production segment could lead to Indonesia capturing a larger piece of market share this year.

“With CMOC (OTC Pink:CMCLF,SHA:603993) not planning any new expansions this year, it is unlikely we’ll see any significant growth from the DRC in cobalt production in 2025,” he added.

Not only will mined supply be crucial in meeting the IEA’s cobalt growth forecast, refinement capacity will also play an important role.

Australia’s Cobalt Blue (ASX:COB) advanced plans for the Kwinana Cobalt Refinery near Perth, proposing an initial production capacity of 3,000 tonnes per annum (tpa) of cobalt sulphate and approximately 500 tpa of nickel metal. Construction is slated to commence in the first half of 2025, with completion expected within 12 months.

Changing battery chemistries threaten cobalt’s demand outlook

In 2024, record-breaking global EV sales helped solidify cobalt’s critical role in the energy transition. With China spearheading a 40.7 percent surge in EV and hybrid adoption, supported by aggressive pricing and subsidies.

China remained the largest growth market as domestic automakers outpaced foreign rivals.

European sales rebounded from early-year setbacks, with stricter emission penalties set to drive further adoption in 2025.

Despite US market uncertainties, growing EV demand globally will sustain cobalt’s importance, although supply chain challenges and alternative battery technologies may influence its trajectory.

“As LFP becomes increasingly dominant in China, sentiment for cobalt chemicals used in batteries has turned more bearish,” Aubry said. “A downturn in demand may put sulphate refiners under additional pressure, particularly at a time where the current market dynamics already present significant challenges due to prices.”

Rising copper and nickel production bolsters cobalt glut

Another factor that could lead to additional cobalt surpluses is the production correlation with copper and nickel.

A November 2024 Fastmarkets report noted that 76 percent of global cobalt supply comes from copper/cobalt mines in the DRC. The by-product status exposes cobalt to the market dynamics in the copper space.

In 2024 copper production in the region was on the rise to facilitate the energy transition, which in turn weighed on the cobalt market.

“But with cobalt demand remaining decidedly sluggish, copper’s upward trajectory will continue to fuel cobalt oversupply and, combined with the fact that copper production is poised to expand further, this will keep cobalt prices under pressure,” the Fastmarkets report read.

A similar picture is also playing out in Indonesia where cobalt is mined as a byproduct of nickel.

Indonesia’s rise as a cobalt powerhouse is poised to reshape the market, fueled by its booming mixed hydroxide precipitate (MHP) production.

In 2024, the country supplied 10 percent of global cobalt, up from 7 percent in 2023, driven by Chinese-backed investments in nickel laterite ore projects using high-pressure acid leach (HPAL) technology.

Despite weak nickel prices, these projects are ensuring long-term cobalt output growth, with MHP-derived cobalt production projected to rise 17 percent in 2025. Producers are increasingly favoring cobalt metal over sulfate due to higher profitability and easier storage.

Additionally, cobalt from Indonesia may also be immune to US tariffs.

Indonesia’s cobalt metal could potentially enter the US market tariff-free, unlike Chinese cobalt, which faces a 25 percent import tariff,” Fastmarkets reported. “That possibility could raise concerns about shifting global supply dynamics and increase the pressure on cobalt prices.”

Due to these factors Fastmarkets is expecting a continued surplus of 21,000 metric tons in 2025 a slight decrease from 2024’s glut of 25,000 metric tons.

Increased copper and nickel production is driving this trend, but challenges loom. Weak nickel pricing, driven by Indonesia’s rapid growth, is squeezing producers in higher-cost regions like Australia and Canada, threatening project viability.

Meanwhile, geopolitical tensions, trade barriers, and a strong US dollar could further disrupt cobalt flows, especially from Chinese-backed Indonesian operations.

The market’s trajectory will depend heavily on economic conditions, trade dynamics, and evolving technologies, the report concluded.

Ethical supply concerns

As the global mining sector faces increased scrutiny for its extraction practices, the DRC’s cobalt industry has proven to be a focal point for sustainability and social governance concerns.

Child labour at artisanal and small scale cobalt mines in the country has drawn international attention and prompted the US Department of International Labour to establish the Combatting Child Labor in the Democratic Republic of the Congo’s Cobalt Industry (COTECCO program.

In its six years the project has trained 458 stakeholders from government, civil society, and private sectors on combating child labor and introduced tools like ILAB’s Comply Chain to 28 mining entities in Lualaba and Haut-Katanga.

While these are moves in the right direction, the long running attention the DRC’s cobalt sector has faced could be a deterrent to new capital.

“Alternatives to the DRC are likely to become more attractive to investors if it can sidestep other potential pitfalls, such as high refining energy costs. Until a more sustainable supply chain is embedded, or there are more substantial regulations implemented to limit the prevalence of artisanal mining, prices are unlikely to see a premium for sustainably sourced cobalt in the immediate term,” said Aubry.

Trump’s tough tariff talk

Although Indonesian supply may be exempt from current US trade rules, that could change in the near term.

The re-election of President Donald Trump has introduced significant uncertainty into the cobalt market, particularly concerning the future of electric vehicle (EV) policies and potential trade measures.

Market participants have expressed concerns that President Trump may reverse existing EV legislation, notably the Inflation Reduction Act (IRA), which has been instrumental in channeling approximately US$312 billion into US EV production and infrastructure.

President Trump has previously indicated intentions to ‘end the electric vehicle mandate on day one,’ aiming to ‘save the auto industry from complete obliteration.’

Despite these statements, the proliferation of EV manufacturing facilities in predominantly Republican states suggests that any policy reversals could face resistance due to the economic benefits these projects bring to local communities.

Additionally, the possibility of imposing stricter tariffs on Chinese-origin cobalt and EVs is a concern among market watchers and participants.

Gina Rinehart’s iron ore investments

Gina Rinehart’s iron ore investments in Western Australia extend beyond Roy Hill and Hill Downs to its subsidiary Atlas Iron’s three producing mines and a pipeline of development projects, as well as an earn-in agreement on Legacy Iron Ore (ASX:LCY) and Hawthorn Resources’ (ASX:HAW) Mt Bevan project through its subsidiary Hancock Magnetite Holdings.

Rinehart’s Hancock Prospecting acquired Atlas Iron in 2018 through a AU$427 million deal that turned out to be dirt cheap as the company would go on to deliver AU$1.5 billion in revenues over the next three years alone.

Today, Atlas Mines operates the Mt Webber, Sanjiv Ridge and Miralga Creek mines. Production from these mines in its fiscal year ended June 2023 led to a AU$222 million dividend payment for Rinehart’s Hancock Prospecting.

At Mt Bevan, as part of its earn-in agreement, Hancock completed a prefeasibility study (PFS) for a 12 million tonne per year high-grade magnetite project in July of 2024. The PFS incorporated a mineral resource estimate totalling 1,291 million tonnes, which was completed by Atlas, and delineates a capital cost of AU$5 billion to develop the potential Mt Bevan mine.

Completion of the PFS increased Hancock’s stake in the JV ownership from 30 percent to 51 percent with Legacy now holding 29.4 percent and Hawthorn 19.6 percent.

Like iron, coal is another essential material in steel manufacturing. To this end, Rinehart is also pursuing an investment in a past-producing metallurgical coal mine in Alberta, Canada. Hancock Prospecting subsidiary Northback Holdings is the owner of the proposed Grassy Mountain steelmaking coal project in the province’s Crowsnest Pass region. Northback is awaiting approval of its exploration licenses for the project.

Gina Rinehart’s lithium investments

Gina Rinehart’s lithium investments include Azure Minerals’ (ASX:AZS) Andover lithium project, Liontown Resources, Delta Lithium (ASX:DLI) and Vulcan Energy Resources (ASX:VUL). The majority of her lithium investments have came in a flurry over the past year.

In June 2023, Rinehart’s Hancock Prospecting signed a separate joint venture earn-in agreement for the Mt Bevan magnetite project, which is discussed above, this time for the lithium, nickel and copper mineralization at the project. The agreement will similarly see Hancock able to earn a 51 percent interest by completing certain milestones.

Last September, Rinehart made headlines when she took a position in Liontown Resources and then rapidly increased the position to 19.9 percent over the following month. This allowed Hancock, which was now Liontown’s largest shareholder, to effectively block Albemarle’s (NYSE:ALB) accepted takeover of the smaller lithium company.

However, since then, Liontown’s stock has taken a hit as the economics for its near-production Kathleen Valley lithium project in Western Australia have been damaged by the effects of high inflation and low lithium prices. Ultimately, in January, Albemarle decided to sell off its 4 percent stake in Liontown Resources. The lack of any further moves or comment by Rinehart in relation to Liontown Resources has led to speculation she may be waiting for the right opportunity to buy up the lithium company at a discount.

Kathleen Valley entered production in late July 2024, and is expected to produce approximately 2.8 million tonnes per year of spodumene concentrate by the end of FY 2027.

That wasn’t the only lithium bid Rinehart blocked in October 2023. As is her strategy, Rinehart scooped up an 18.9 percent stake in Azure Minerals last year after SQM announced its intention for a total takeover of the company and its Andover lithium project in the West Pilbara region of Western Australia. This story had a different ending, though, as Hancock Prospecting instead joined the lithium giant in a AU$1.7 billion deal to become a co-owner of the exploration-stage Andover project, which also hosts nickel, copper and cobalt mineralisation. The deal closed in May 2024.

Shortly after its Liontown and Azure moves last year, Hancock Prospecting continued investing in Western Australia’s lithium prospects when it participated in a AU$70.2 million fundraising for Delta Lithium in November 2023. The proceeds of the fundraising will help Delta Lithium to fund the development of its Mt Ida lithium-gold project, which is adjacent to Hancock’s Mt Bevan joint venture project. As of November 2024, Hancock Prospecting owns 10.65 percent of Delta Lithium.

Rinehart has made lithium investments outside of Australia as well. Looking further afield to Germany, with a 7.5 percent stake, Hancock Prospecting is the second largest shareholder in Vulcan Energy and its flagship Zero Carbon lithium project in Germany’s Upper Rhine Valley, a milestone Rinehart’s company reached after investing an additional AU$20 million in Vulcan, which made headlines in June. The Zero Carbon project is slated to produce an initial 24,000 tonnes of lithium hydroxide by the end of 2025, targeting Europe’s electric vehicle manufacturing sector.

In November 2024, Vulcan Energy reached another major milestone with first production at its downstream lithium hydroxide optimisation plant, which is designed to produce lithium hydroxide and battery-grade lithium hydroxide monohydrate.

Gina Rinehart’s rare earths investments

Facilities at MP Materials’ Mountain Pass rare earths mine.

clayton harrison / Shutterstock

Through Hancock Prospecting, Gina Rinehart has recently made investments in some of the world’s most well known rare earths producing companies — US-based MP Materials and Australia’s Lynas Rare Earths — as well as development-stage Arafura Rare Earths and exploration-stage Brazilian Rare Earths (ASX:BRE). Rinehart taking a position in these rare earths companies shows she is looking to capitalise on the significant need for these critical metals outside of China.

As mentioned in the introduction to this article, Rinehart’s Hancock Prospecting is the largest shareholder of Arafura Rare Earths, giving it a 10 percent stake in the advanced-stage Nolans project in the Northern Territory. Rinehart made the investment in December 2022.

In April of 2024, Rinehart made two significant moves into the sector. The first came on April 9, when it was revealed that Hancock Prospecting had acquired a 5.3 percent stake in MP Materials, the second largest rare earths producer outside of China. The company’s California-based Mountain Pass mine is the only integrated rare earth mining and processing operation in North America.

Rinehart’s investment in MP Materials could later bring in “Roy Hill-type cash flow,” Dylan Kelly, head analyst at Terra Capital, told Australian Financial Review. “Anything that is producing and not China-aligned is highly strategic. These materials are very, very hard to make and there’s a lot of demand in making magnets for electric vehicles and wind turbines.’

One week later, Rinehart’s Hancock Prospecting also took up a 5.82 percent interest in Lynas Rare Earths, the largest ex-China rare earths producer. The Australian rare earths miner produces the critical metals at its Mount Weld mine in Western Australia and ships the raw material to Malaysia for processing. Lynas is also ramping up processing at its Kalgoorlie rare earth processing facility in Australia, and building light rare earths processing facilities and a heavy rare earths separation facility in Texas, US.

Rinehart’s near simultaneous investments in both Lynas and MP Materials comes after merger talks between the two rare earths behemoths stalled in February. There is speculation stirring that Rinehart’s participation could renew merger discussions, Reuters reported. In November, the mining mogul increased her position in MP Materials to 8.5 percent, further raising the possibility of a merger down the road.

Andy Forster, Lynas investor and senior investor of Argo Investments, had his interest piqued by Rinehart’s move ‘given she’s clearly made a play across the whole space. She obviously wants to potentially have a seat at the table if there’s any chance of consolidation.’

Rinehart is also getting her foot in the rare earths door at the exploration level. In 2023, Rinehart’s Hancock Prospecting made a pre-IPO investment for a 5.85 percent share in Brazilian Rare Earths, which went on to list on the ASX in December of that year. The rare earths explorer is working its district-scale Rocha da Rocha rare earth province in the state of Bahia, Brazil. The province is highly prospective for both heavy and light rare earths, with grades of over 40 percent total rare earth oxides found. Brazilian Rare Earths is working to complete an updated JORC mineral resource estimate.

Gina Rinehart’s copper investments

Gina Rinehart’s copper investments are centered on Ecuador’s Andean copper-gold belt, and include explorer Titan Minerals and Ecuador’s state-owned Empresa Nacional Minera (ENAMI).

Ecuador has seen a rush of major mining companies taking up positions in key copper and gold projects in recent years, placing Hancock Prospecting in the company of Barrick Gold (TSX:ABX,NYSE:GOLD), Zijin Mining (HKEX:2899) and Anglo American (LSE:AAL,OTCQX:AAUKF).

Rinehart’s Ecuadorian copper investments are in line with her shift toward the critical metals necessary for the green transition and her strategy to expand the global footprint of her mining empire.

Hancock Prospecting subsidiary Hanrine Ecuadorian Exploration and Mining has been in the region since 2017, but recently began making more investments. In March 2024, Hancock Prospecting subsidiary Hanrine Ecuadorian Exploration and Mining acquired a 49 percent stake in six mining concessions for AU$186.4 million. The deal sees it partner with state mining company ENAMI for the concessions, which surround the stalled Llurimagua copper-molybdenum project in Northern Ecuador.

In late April, Ecuador’s constitutional court nixed appeals by ENAMI and its partner in the Llurimagua project, Chile’s state-owned CODELCO, to review the March 2023 decision by Imbabura’s provincial supreme court suspending the environmental license for Llurimagua.

Shortly after the investment with ENAMI, Rinehart’s Hanrine made another play in Ecuador by striking an earn-in agreement with Titan Minerals for up to an 80 percent ownership stake in the explorer’s Linderos copper-gold project contingent on up to AU$120 million in exploration spending. Linderos is an early-exploration stage project with the potential to host a large-scale copper porphyry system. Hanrine has made an initial investment of AU$2 million for a 5 percent stake.

Gina Rinehart’s oil and gas investments

Gina Rinehart’s oil and gas investments include private firms Warrego Energy in Western Australia and Senex Energy in Queensland.

In February 2023, Hancock Prospecting won a protracted bidding war for the then-public Warrego with Warrego’s joint venture partner Strike Energy (ASX:STX) for a price of AU$0.36 per share. Warrego and operator Strike Energy maintain their 50/50 joint venture on the West Erregulla onshore gas field within exploration permit EP 469 near Perth in Western Australia.

In mid-August 2024, the West Erregulla project received its production licence and the partners expect to start operations once a final investment decision is made later this year. During phase one, the project is expected to produce 87 terajoules per day.

As for Senex Energy, it is a joint venture between POSCO (50.1 percent) and Hancock Prospecting subsidiary Hancock Energy (49.9 percent) that holds the Atlas and Roma North natural gas developments in Queensland’s Surat Basin. The two JV partners acquired Senex in 2022, with Rinehart’s company putting up AU$440.89 million.

Senex Energy is embarking on a AU$1 billion expansion endeavor at Atlas and Roma North this year that will see 60 petajoules of natural gas delivered to Australia’s east coast market annually by the end of 2025. This figure represents more than 10 percent of the region’s demand. Regulatory approval for the expansion was finally approved following an uphill battle with a Federal government more keen on renewable energy projects than the natural gas variety. Hancock Prospecting reported the first flows of gas production from the expansion field in late November 2024.

Rinehart once had a significant stake of nearly 20 percent in Lakes Oil, now Lakes Blue Energy (ASX:LKO), through subsidiary Timeview Enterprises. Timeview’s stake in Lakes Blue Energy has been lowered in recent years, but it remains the company’s fourth largest shareholder at 4.63 percent.

In late October, Rinehart offered financial assistance to Mineral Resources (ASX:MIN,OTC Pink:MALRF), a diversified mining company with lithium, iron ore and oil and gas operations in Western Australia. Headed by another mining heavyweight, Chris Ellison, Mineral Resources, or MinRes, is reportedly drowning in debt and embroiled in a tax evasion investigation. At that time, Hancock Prospecting agreed to a AU$1.13 billion buyout of MinRes’ oil and gas projects in the Perth Basin and an exploration acreage in the Carnarvon Basin.

The 100 percent sale of two of MinRes’ exploration permits to Hancock was completed in December for initial consideration of AU$780 million, with potential for up to AU$327 million depending on whether certain conditions and thresholds are met. The permits include the Moriarty Deep prospect and the Lockyer gas and Erregulla oil discoveries.

Separate to that sale, the two companies are also forming two 50/50 exploration joint ventures for MinRes’ remaining permits in the Perth and Carnarvon Basins. Hancock will acquire 50 percent of the MinRes Explorer drill rig, which is the largest in Australia.

Gina Rinehart’s potash and agriculture investments

Gina Rinehart’s potash and agricultural investments center on Hancock Prospecting’s ownership interests in multiple premium cattle stations in Australia, and the company’s royalty revenue generated from the Anglo-American-controlled Woodsmith potash project currently under construction in the United Kingdom.

With an original investment of AU$380.6 million in 2016 to then-owner Sirius Minerals, Hancock Prospecting has a 5 percent revenue royalty on the first 13 million tonnes of fertiliser produced from Woodsmith and 1 percent thereafter. Hancock also has a 20,000 tonne-a-year offtake option. The timeline for Rinehart’s royalty revenue has been pushed back, however, as Anglo is cutting spending at Woodsmith following BHP’s (ASX:BHP,NYSE:BHP,LSE:BHP) failed mega-merger with Anglo American.

Investor takeaway

With Gina Rinehart at the helm of Hancock Prospecting, the Roy Hill iron ore mine has generated stellar revenues. That wealth creation not only made her Australia’s richest person, but has also built a powerful war chest from which Rinehart is expanding her mining empire.

Investors can take cues from her recent and future moves in the mining sector. Although she may be defensive toward renewable energy technologies encroaching on agricultural land, she understands the strategical importance of investing in critical metals for the green transition such as lithium, rare earths and copper.

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