S&P rates Mineral Resources notes B+

S&P said it assigned a B+ long-term issuer credit rating to Mineral Resources Ltd., along with a B+ issue rating to the group's $700 million senior unsecured notes with a recovery rating of 4.

Mineral Resources is expected to receive a sizable financial and strategic benefit from partnering with Albemarle on its vertically-integrated lithium hydroxide joint venture.

Although Mineral Resources is likely to generate materially negative free cash flow over the next few years due to high near-term capital expenditure, the agency said it believes free cash flow could materially increase following completion of the company's proposed lithium hydroxide plant.

The rating considers the execution risks associated with the company's growth strategy, as well as its concentrated asset base and end-market exposure, S&P said.

The agency said it does not believe that Mineral Resources' external mining services earnings are of sufficient scale or quality to materially diversify these risks.

The stable outlook reflects a belief that Mineral Resources will appropriately manage its sizable execution risks with sufficient financial buffer to absorb near-term volatility in lithium prices, S&P said.

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