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Lithium exporters announce huge merger in Argentina

Saturday, May 13th 2023 - 10:31 UTC
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Allkem shareholders will own approximately 56% and Livent shareholders will own approximately 44% of NewCo, it was announced Allkem shareholders will own approximately 56% and Livent shareholders will own approximately 44% of NewCo, it was announced

Argentina's two only lithium exporters -Allkem (Australia) and Livent (LTHM)- have announced a multi-billion dollar merger. The companies operating in Catamarca and Jujuy will launch a new company valued at US$10.6 billion, it was reported.

“A leading global producer of lithium chemicals is created, with combined pro forma 2022 revenues of approximately US$1.9 billion and adjusted EBITDA of approximately US$1.2 billion,” the companies said in announcing the deal. According to the companies, the new valuation of the combined company, following the merger of all of its shares, will be US$10.6 billion.

“The transaction is expected to be finalized by the end of 2023, and upon closing of the merger of equals, Allkem shareholders will own approximately 56% and Livent shareholders will own approximately 44% of 'NewCo,'” Alkem and Livent reported.

The merged company will aim to achieve an annual production capacity of approximately 250 kilotonnes of lithium carbonate equivalent (LCE) by 2027.

Livent said the business's critical scale and global capabilities are immediately increased from the deal, “strengthening the ability to serve customers with a more resilient supply chain.”

The companies highlight “the geographically adjacent portfolio of high-quality, low-cost assets in Argentina and Canada, which creates opportunities to accelerate and de-risk the development of a strong pipeline of attractive growth projects.” The merger provides for ”significant expected operating synergies of approximately US$125 million annually (pre-tax) and non-recurring capital savings of approximately US$200 million.”

Allkem was born in 2021 from the merger of Orocobre and Galaxy Resources. The company runs the Olaroz Salt Flat in Jujuy, which has been operating since 2018.

Livent runs the Fenix project in the Dead Man's Salt Flat (Salar de Hombre Muerto) in Catamarca, which has been operational since 1998.

Categories: Energy & Oil, Argentina.

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