Global lithium miners Livent, Allkem announce $10.6-billion merger

Australian-headquartered global lithium miner Allkem and its peer US-listed Livent Corp signed a definite agreement to combine in an all-stock merger of equal value the two companies in a newly created global lithium chemical producer worth $10.6 billion, they jointly said on Wednesday May 10.

The transaction is expected to be finalized within 2023 and will result in Allkem shareholders owning approximately 56% of the new entity, NewCo, while Livent shareholders will hold the remaining 44%.

The merger aims at leveraging the synergies that the global portfolio of assets and expansion projects of the two companies can create under a vertical integrated business model, the companies said, pointing out “the rapidly growing demand of lithium battery-grade salts.”

Lithium is a key ingredient in rechargeable batteries used in e-mobility and energy storage.

Peter Coleman, the president of Allkem, will become the chairman of the new firm, while Livent’s president, Paul Graves, is set to be the chief executive of the newly formed NewCo.

“M&A activity/consolidation is a way for companies to expand their production capacity quickly, rather than having to develop greenfield projects from scratch. But the consolidation also enables the sharing of know-how. Livent has been a leader in direct lithium extraction (DLE) production, using DLE for 15-20 years, so Allkem’s brine operations will now be able to benefit from this, and Livent’s interest in Nemaska Lithium will be able to benefit from Allkem’s hard rock expertise,” Fastmarkets head of battery raw materials research William Adams said.

Allkem’s assets are its predominantly hard-rock mining spodumene operation at Mt Cattlin in Western Australia and the brine-based Olaroz lithium facility in Argentina.

Livent’s main operation is the Hombre del Muerto brine-based asset, which neighbors Allkem’s operation in Argentina.

Livent has also recently announced that it doubled its ownership to 50% in the integrated Nemaska lithium hydroxide project in Quebec, Canada. Investissement Québec (“IQ”) will remain the owner of the remaining 50% interest in Nemaska Lithium.

“After the steep correction in the lithium price, we expected to see an increase in M&A activity as asset valuations became more realistic. The combined NewCo company would represent approximately 7% of global mine production in 2023. With a combined portfolio spanning from extraction to chemicals over multiple jurisdictions and resource types, and a healthy pipeline of expansions and greenfield projects, it will be one of the largest and most resilient lithium producers globally by the end of the decade,” Fastmarkets battery raw materials analyst Jordan Roberts said.

Lithium price recovery

Chinese lithium prices have been on an uptrend since hitting the 2023 low of 150,000-180,000 yuan ($21,689-26,026) per tonne on April 20, supported by bullish sentiment amid expectations of improved demand in May. Other markets were mostly quiet due to the country’s public Labor Day holiday from April 28 to May 3.

Fastmarkets assessed the lithium carbonate 99.5% Li2CO3 min, battery grade, spot price range exw domestic China at 200,000-230,000 yuan per tonne on Thursday May 4, up by 30,000-35,000 yuan from 170,000-195,000 yuan per tonne a week earlier.

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Chinese domestic technical grade lithium carbonate supply is tight due to the previous week’s arbitrage between technical and battery grade carbonate and hydroxide as well as anticipation of a near-term price rally, Fastmarkets’ battery raw material research team said. This strong activity in the technical market has lent support to battery grade lithium salt prices, Fastmarkets analysts added.

Elsewhere, positive sentiment from the Chinese domestic market started to filter through the East Asian lithium market.

Fastmarkets assessed the daily lithium carbonate 99.5% Li2CO3 min, battery grade, spot prices cif China, Japan & Korea at $30-32 per kg on May 9, up 6.9% from a week ago.

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