Mineral Resources (MinRes) has decided to walk away from a lucrative billion-dollar lithium deal.

The agreement would have granted the company a share in Albemarle's lithium hydroxide plants in China, but managing director Chris Ellison says he is now setting his sights on funding and constructing his own downstream processing plant.

The Wodgina lithium mine had brought Mineral Resources and Albemarle together as partners, but Mr Ellison wanted to expand by acquiring a stake in Albemarle's lithium hydroxide plants in China. 

The deal seemed promising, especially since both companies had signed an agreement in February to produce lithium battery chemicals in China using spodumene from the Wodgina mine.

However, MinRes says it has decided to unlock capital and move towards self-sufficiency. It is expected that this shift would open doors for investing in their integrated lithium hydroxide assets, whether onshore or overseas.

The unforeseen reset has been described as a “win-win” for both parties. Albemarle, listed on the New York Stock Exchange, decided to amend the terms of the previous agreement to explore greater strategic opportunities in an evolving lithium market.

The new arrangement grants Albemarle full ownership of the Kemerton plant and the Qinzhou and Meishan lithium processing facilities in China. MinRes, on the other hand, is expected to receive up to US$400 million from Albemarle as part of the revised deal.

Kent Masters, Albemarle's CEO, says the new agreement aimed to align capital investments and assets between the two companies. 

Albemarle is rapidly expanding its energy storage business and progressing with the construction of the Meishan lithium hydroxide processing plant, scheduled for completion in early 2024. 

Additionally, they are initiating the construction of processing trains three and four at the Kemerton lithium hydroxide processing facility.

With MinRes relinquishing its 15 per cent ownership of train 1 at Kemerton, questions arose about the fate of Albemarle's ambitious $15 billion bid for Liontown Resources, an emerging lithium producer. 

The revised deal might impact Albemarle's Australian feedstock supply for its Chinese plants, leaving them to explore other assets in Western Australia.