Orocobre Galaxy lithium gathering pond merger

Orocobre and Galaxy to merge, forming lithium giant

CANBERRA, April 21, 2021 – Australian lithium miner Orocobre will merge with rival Galaxy Resources to form the world’s fifth-largest lithium chemicals company, valued at USD 3.09 billion.

The new company will operate in Australia, Chile, Argentina, Canada and Japan, Orocobre said on Monday.

The deal comes at a time of increasing consolidation in the lithium industry, as the mineral’s prices continue to soar due to expectations of rising demand from the electric vehicle market.

Lithium is one of the main components of lithium-ion batteries, and given the increasing electrification of transport and the increased role of large batteries in renewable power generation facilities, the price of lithium is expected to continue to rise during this decade. Australia is the main producer, followed by Chile and Argentina.

There are two widespread methods of extracting lithium: extracting lithium ore spodumene concentrate from hard rock, and extracting lithium carbonate from brine, which is generally found in inland salt lakes, particularly in South America. The merged company will use both methods, with hard rock mines at Mount Cattlin, Western Australia, and James Bay in northeast Canada, and brine operations at Naraha in Chile and Olaroz and Sal de Vida in Argentina.

Both companies are of similar size, with Orocobre valued at USD 1.7 billion and Galaxy at USD 1.4 billion. The deal will give Galaxy’s shareholders 0.569 Orocobre shares for each Galaxy share. Orocobre will own 54.2% of the combined company, while Galaxy shareholders will own the remainder.

Orocobre CEO Martín Pérez de Solay expects that the merger will provide the new company with significant operational, technical and financial flexibility. Even though the company operates in the Australian Stock Exchange, its main office will be in Buenos Aires, plus a corporate office in eastern Australia and one in Perth.

The company will become the fifth-largest lithium chemical products company in the world after Ganfeng (China), Albermale (USA), SQM (Chile) and Tianq (China).

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