Australian mining groups to become world’s fifth-largest producer of lithium
Orocobre and Galaxy Resources an Australian mining group plans to merge in a A$4bn (US$3.1bn) deal to create one of the world’s largest lithium producers. As lithium is in high demands to use for electric vehicles turbocharges prices for the metal.
This deal will help to establish a diversified production base across Australia, South America and Canada to boost the production of more and more said the Australian Securities Exchange-listed companies.
Lithium is an important material in electric vehicle batteries. Both the companies will become the world’s fifth-largest producer of lithium. The companies said in the next few years they have the capacity to expand the annual production of lithium carbonate from 40,000 to 100,000 tonnes using raw materials used in batteries.
Simon Hay, Galaxy chief executive said “The transaction will allow the group to materially accelerate the development of our combined growth projects,” And this growth is perfectly timed to meet the demand surge coming from our customers.”
After the announcement, the share of the Orocobre increased to 5 per cent and whereas Galaxy added 2.7 per cent. The Galaxy and the Orocobre plan some big development projects, including Olaroz and Sal de Vida in Argentina and James Bay in Canada. For that, they will require more than A$1bn in capital expenditure.
“The combined entity will have materially increased liquidity and improved access to capital, which we see as a major enabler to delivering accelerated growth plans,” said Reg Spencer, an analyst at an investment bank Canaccord Genuity. The companies will be headquartered in Argentina as Orocobre operates its Olaroz lithium facility. Both the companies are forecasted to produce 130,000 tonnes of lithium carbonate by 2025 if the merger further works.
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