Major lithium producers Allkem and Livent announced an all stock merger scheduled to close by the end of 2023

On 10^th May, Allkem and Livent announced their plans to merge operations in an all stock merger which would see the formation of a new lithium major. The new company will take ownership of the Mt. Cattlin mine in Australia, the Salar de Olaroz and Salar del Hombre Muerto brine operations in Argentina, along with the Bessemer city processing facility in the USA, the Nahara plant in Japan, the Rugao plant in China and various other processing facilities globally. In addition, Allkem and Livent’s development projects including the Sal de Vida and Cauchari brine projects in Argentina, the James Bay project in Canada and a 50% share in the Nemaska Lithium project also in Canada will also be absorbed by the new company. 

Under the merger, Allkem shareholders will acquire a 56% interest in the new entity, with Livent shareholders gaining the remaining 44%. The combined production for Allkem and Livent’s operations would have formed the fifth largest refined lithium producer in 2022, behind SQM, Albemarle, Ganfeng Lithium and Tianqi Lithium, with output totalling roughly 34kt LCE. The merger deal is expected to be concluded by the end of 2023, with both parties looking to benefit from improved vertical integration in the lithium supply chain and a greater geographical presence.

There has been a surge of M&A activity in the lithium industry since Q1 2023, with major producers looking to use high revenues generated in 2022 to secure market share as lithium prices have fallen away. While most M&A approaches to date have looked to secure feedstock, the Livent and Allkem merger looks downstream, ensuring that an integrated supply chain can be maintained and expanded. New expansions are expected to increase total capacity at the merged company to ~250ktpy LCE by 2027, equivalent to 7.5% of Project Blue’s forecast demand for the year.