Orocobre and Galaxy Resources, two of Australia’s top lithium miners, have completed a $4 billion merger and are on track to become the world’s fifth most-valuable producer of the sought-after electric battery raw material.
The combined company – to be named Allkem, subject to shareholder approval – will retain its primary listing on the ASX and have operations spanning brine and hard-rock lithium mining and processing in Australia, Argentina, Canada and Japan.
Orocobre chief executive Martin Perez de Solay said the tie-up “could not have been put together at a better time”, as global automakers expand their electric vehicle lines and analysts project at least a five-fold increase in global demand for lithium by 2030.
“With the merger, we will go further in our commitment to delivering the lithium chemicals that the world increasingly needs to mitigate climate change and carbon emissions,” said Mr Perez de Solay, who will remain CEO of the combined business.
“It will give us significant operational, technical and financial flexibility to deliver the full value of our combined portfolio.”
Lithium prices, which had tumbled sharply since 2018 amid an influx of supply outpacing demand, have rallied this year. While electric vehicles presently account for about 3 per cent of new sales, uptake is lifting in China, the United States and Europe, and governments are unleashing “green” post-pandemic stimulus packages targeting transport electrification.
Investors and analysts are also showing renewed optimism about the dawn of the electric vehicle era and are betting billions on the future of lithium products.
Macquarie analysts said strong electric vehicle sales and supply shortages, combined with an emerging spot market, are set to drive prices towards previous peaks.