Australian mining companies Orocobre and Galaxy Resources are planning to merge an A $ 4bn (US $ 3.1bn) deal that could make it one of the largest lithium manufacturers in need of electric turbocharged vehicles.
The companies listed on the Australian Securities Exchange said on Monday that the incorporated business will create multi-brand solutions in Australia, South America and Canada, as well as strengthen corporate capacity and potential for rapid growth.
Together, Brisbane-based Orocobre and Perth’s capital are probably the world’s fifth-largest manufacturer of lithium, which is the most important in electric batteries. The two companies said they have the potential to increase the annual production of lithium carbonate, a type of batteries, from 40,000 to 100,000 tons in the next few years.
“These products will help the team promote the development of our integrated services,” Simon Hay, CEO of Galaxy, told vendors. “And this growth has taken place at the right time to address the growing number of our customers.”
Shares in Orocobre rose by about 5% following the announcement of the contract, while those in Galaxy increased 2.7%.
Among them, Galaxy and Orocobre are planning a number of major projects, including Olaroz and Sal de Vida in Argentina and James Bay in Canada, which researchers think will cost more than A $ 1bn in spending.
The consortium would be based in Argentina, where Orocobre operates Olaroz’s lithium manufacturing facility, with a total budget of $ 487m.
“The joint venture will increase the size of the economy and provide access to finance, which we see as a key to achieving faster growth plans,” said Reg Spencer, a researcher at commercial bank Canaccord Genuity.
Canaccord estimates that up to 130,000 tons of lithium carbonate will be released by the company if the combination continues.
The global market for lithium has returned after two years of suffering prices, fueled by concerns over the availability of mining.
Lithium carbonate prices it’s gone about 70% this year is in high demand for electric vehicles, according to Macquarie. The bank predicted inflation of 30-100% over the next four years, e.g. electric cars are starting to move 1bn or global combustion engine.
“Our electric vehicles require the lithium market to move [a] the deficit in 2022 and the lack of resources that started from 2025, ”Macquarie said in a recent statement.
Under the merger approved by both corporations, the shareholders of the Galaxy will receive 0.57 units of Orocobre for each Galaxy group. Shareholders in Orocobre own 54.2% of the joint venture, while Galaxy retailers own the remainder. Combinations are approved by shareholders.
Martín Pérez de Solay, Orocobre’s chief executive, will lead the group. Hay’s Galaxy will be the President of the integrated business and Solay reporting firm.
“The company will have a very high level of investment and this will enable us to raise any debt that may be needed to create jobs. . . quickly, ”de Solay said.
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