Allkem and its US rival Livent will list as a newly formed company on the New York Stock Exchange after announcing an all-share “merger of equals.” ASX-listed Allkem’s shares jumped nearly 16 per cent on Thursday to $14.94 and Livent’s stock rose more than 5 per cent on the New York exchange overnight Wednesday as investors digested news of the deal.
Livent chief executive officer Paul Graves will lead the new entity,which will be 56 per cent owned by Allkem shareholders and 44 per cent by Livent’s investors. No role was declared for Allkem’s CEO Martín Pérez de Solay who will stay on as a consultant after the merger to help it integrate its businesses. Allkem director and former Woodside Energy chief executive Peter Coleman will be chairman.
Graves told this masthead that the US automotive industry’s rush to electrification has been a boon for lithium miners and is forcing them to get bigger.
“It’s pushing them to localise their supply chains. That means we need to grow quicker,which,as we said,is at the heart of why we want to do this[merger];the ability to grow quicker and add more volume,” he said.
Another major factor guiding the merger is America’sInflation Reduction Act,which specifies a certain percentage of minerals used to make EV batteries sold in the US has to be extracted from or processed in countries that have free-trade deals with the US. That’s prompting the industry to search for supplies from countries that could benefit from the tax credit,which would include Australia and Canada.
The merged company will become the third-largest lithium producer globally with exposure to spodumene (hard-rock mining),carbonate,hydroxide and specialty chemicals. It’s a mix of mining and production that will “benefit its ability to secure returns regardless of the dominant long-term battery chemistry,” analysts at RBC Capital Markets said.