Australian Lithium Company Enters into $15.7 Billion Merger with US Partner

Australian Lithium Company Enters into $15.7 Billion Merger with US Partner
Workers walk past 500-kilogram bags of lithium being stored at the El Carmen lithium processing plant in Antofagasta, Chile, on Sept.13, 2022. (Martin Bernetti/AFP via Getty Images)
Alfred Bui

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.

On May 11, Brisbane-headquartered Allkem and New York Stock Exchange-listed Livent announced that the two companies would enter into a merger of equals. The result of which will be an entity that ranks third in the world’s lithium supply chain, after North Carolina-based Albemarle and Chilean chemical company SQM.

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.

“As a combined company, we will have the enhanced scale, product range, geographic coverage, and execution capabilities to meet our customers’ rapidly growing demand for lithium chemicals,” he said.

“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.

“We are bringing together two highly complementary businesses to create a leading global lithium chemicals company, building on Allkem’s demonstrated track record of integration,” he said.
“The combination brings together teams with strong expertise in project development, product innovation, and marketing and sets us up for a faster and de-risked delivery of the next phase of our growth.”

Major Benefits of the Merger

According 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.

Lithium-rich brine dries in an evaporation pond at a lithium mine in Salar de Atacama, Chile, on Aug. 24, 2022. (John Moore/Getty Images)
Lithium-rich brine dries in an evaporation pond at a lithium mine in Salar de Atacama, Chile, on Aug. 24, 2022. (John Moore/Getty Images)

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.

The two companies expected the deal to be finalised by the end of 2023.

Northern Territory Lithium Mine Expansion

The 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.

“Lithium is in high demand right across the world, and the Northern Territory has the resources needed for a renewable future,” she said.

“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.”

Alfred Bui is an Australian reporter based in Melbourne and focuses on local and business news. He is a former small business owner and has two master’s degrees in business and business law. Contact him at [email protected].
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