Australian miners Orocobre and Galaxy Resources are set to merge as part of a A$4 billion (€2.58 billion) merger which looks to create one of the world's single largest producers of lithium following a demand spike as many automakers look to begin their energy transition and create greener engines.
The coalition would continue to operate through both companies' primary markets across Australia, South America and Canada while also allowing the company to continue to grow rapidly in the future.
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The deal was announced on Monday and the merger means the two companies will ascend to be the fifth largest producer of lithium in the world.
The two companies revealed they could expand the production of lithium carbonate from 40,000 to 100,000 tonnes annually within the next few years.
Orocobre Chairman Robert Hubbard told a conference on Monday that the "logic of this merger was compelling."
He said: “Both Orocobre and Galaxy shareholders will benefit from the diversification, growth and scale of a top-five global lithium chemicals company."
He added the merger would highlight the groups' "commitment to transparency regarding its environmental, social and governance policies," the foundations of which will "continue to be developed."
Executives from both companies revealed the transaction would create one of the most diverse lithium companies on the planet, spanning several treatment methods and producing a number of products with the goal of creating an "extensive pipeline" for growth.
Simon Hay, Galaxy chief executive, said: “The merger with Orocobre represents an exciting opportunity for both Orocobreand Galaxy shareholders to consolidate and realise the full potential of our asset portfolios and technical capabilities.
"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.”
The group is currently overseeing two major expansion projects: Olaroz and Sal de Vida in Argentina and James Bay in Canada with the potential for these projects to bring in over $1 billion in capital expenditure.
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The coalition is set to be headquartered in Argentina and start off with $487 million (€405 million) in cash on its balance sheet.
As part of the deal, Galaxy's chairman, Martin Rowley, would be stepping into the role of non-executive chairman. Robert Hubbard would also take up the mantle of deputy chairman.
A name for the merger has yet to be revealed. A press release put out by the companies hinted that the name will be announced in due course.
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