MELBOURNE - Australia's Mineral Resources said on Wednesday it would sell a 30% stake in part of its lithium business to South Korea's Posco for $765-million as it seeks to cut debt and repair its balance sheet, sending its shares to a more than one-year high.

The diversified miner and mining services provider known as MinRes is seeking to climb out of a debt hole caused by large capital spending on its Onslow Iron haul road project and a collapse in lithium prices that hit earnings. It has also been beset by corporate governance concerns surrounding its founder and CEO Chris Ellison.

For Posco, which already has a joint venture lithium hydroxide project in South Korea with Australian lithium miner Pilbara Minerals, the deal marks its first foray into Australian lithium mines at a time when prices of the commodity remain low.

Shares of MinRes gained as much as 10.8% in early trading on Wednesday, hitting their highest level since October 11, 2024.

The deal will create an incorporated joint venture that will hold MinRes' existing 50% ownership in the Wodgina and Mt Marion lithium mines, giving Posco an indirect 15% interest in each of the projects, MinRes said on Wednesday.

The company will remain the mines' operator under its existing agreements with the respective partners.

Posco CEO In Hwa Chan said in a statement that his company viewed energy materials as a core growth driver alongside its steel business and was committed to securing a stable, cost-competitive supply of the raw materials.

LITHIUM PRICE FALL HITS HARD
In August, prices of hard rock spodumene, the lithium-bearing mineral, rebounded to about $880/t from a fall to four-year lows near $610/t in mid-June, but remain well short of 2022 peaks above $6 000.

The decline in the prices pushed Australian miners to mothball operations and more recently to consider disposing of assets to rebuild their balance sheets.

Reuters reported in August that MinRes had tried to sell stakes in Mt Marion and Wodgina this year but the process lost steam after prospective buyers from India and Japan balked at the suggested price tag of more than $2 billion.

In November 2024, the miner put its Ball Hill lithium mine in Western Australia on care and maintenance.

In August, MinRes posted an annual net loss after tax of A$896-million and reported debt of A$5.3-billion, a 21% rise from the prior financial year.

MinRes said it expected to use the proceeds from the POSCO deal to repay external debt, fortify its balance sheet and position the company for its next phase of growth.

Under the deal, Posco will receive spodumene concentrate in proportion to its 30% interest in the joint venture.

Wodgina, one of the world's largest hard-rock lithium deposits, is operated in partnership with Albemarle. China's Ganfeng Lithium is the partner for Mt Marion.