A new global lithium giant will emerge from the $15.7 billion (US$10.6 billion) merger between one of Australia’s largest lithium producers and a U.S.-based company.
A merger of equals occurs when two companies of similar size come together to create a new firm. The shareholders of both companies then give up their current shares to receive corresponding securities in the new entity.
Following the merger, Allkem shareholders would own 56 percent of the combined company, while Livent shareholders would control the remaining 44 percent.
Livent president and chief executive Paul Graves will become the new company’s CEO, while Allkeem non-executive chairman Peter Coleman will hold the chairman position.
Graves said he was excited about what lay ahead of the merger and the role the new company would play in the global energy shift to renewables.
“This transaction will capitalise on our highly complementary business models and our collective strengths, including our best-in-class technologies, assets, and people, to be a leading force in our industry driving growth in electric vehicles (EV) and energy storage applications.”
Graves also mentioned that the combined company would have a production presence in Western Australia, Canada and South America–three major lithium geographies, with an expected production capacity of 250,000 tonnes per year by 2027.
Meanwhile, Allkem CEO Martín Perez de Solay called the merger transformational, saying it marked a significant milestone in the company’s development.
Major Benefits of the MergerAccording to the briefing from Allkeem and Livent, the combined company will have access to large, high quality and low-cost lithium deposit bases in Western Australia, Canada and Argentina, as well as processing plants close to customers in Japan, China and the United Kingdom.
It will also capitalise on the lithium processing technology, which Livent excels, and the complementary expertise in conventional brine-based lithium extraction from Allkem.
The merger is also expected to save US$125 million a year on top of US200 million in one-off savings due to reductions in operating costs resulting from the use of combined assets in Argentina and Quebec.
At the same time, the combined entity will have a primary listing on the New York Stock Exchange and a secondary listing on the Australian Securities Exchange, providing greater liquidity for investors.
For the merger to go through, Livent and Allkem need the approval of their shareholders and a conclusion from independent experts that the transaction was in the best interest of the shareholders.
Northern Territory Lithium Mine ExpansionThe merger between Allkem and Livent comes as the Northern Territory (NT) government has approved an expansion to a major lithium mining area in the jurisdiction.
On May 11, Core Lithium announced that it had received approval to open a second mine at its Finniss lithium operation.
The BP33 underground project, which is located 5 kilometres from the Grants open pit, is expected to employ 60 people during construction and around 150 people when operational.
The new mine was estimated to contain 10.1 million tonnes of ores with 1.48 percent of Lithium oxide concentrate.
NT Mining and Industry Minister Nicole Manison believed the new lithium mine would benefit the territory’s economy.
“Core Lithium has demonstrated their ability to extract and export critical minerals within a short time frame. This latest proposed mine will be no exception and comes with benefits to local suppliers, local jobs and the Territory economy.”