Lithium companies have been active in M&A lately, and more may follow after the proposed deal between Galaxy Resources and Orocobre.
Australia’s Orocobre (TSX:ORL,ASX:ORE) and Galaxy Resources (ASX:GXY,OTC Pink:GALXF) agreed this week to join forces in a AU$4 billion “merger of equals.” The deal comes as demand for lithium for electric vehicle (EV) batteries continues to pick up pace.
Once the merger is complete, the new company will become a top five lithium chemicals company globally and top three outside of China with production capacity of around 40,000 tonnes of lithium carbonate equivalent per year.
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Acceleration of new lithium projects looks set to be the biggest outcome of a $4 billion merger between Orocobre and Galaxy Resources, with the man who will lead the merged entity declaring it will be âfull speed aheadâ on a long list of growth projects.
Orocobre and Galaxy currently have one lithium production asset each, but the merged entity could have four in the medium term, a new downstream processing plant plus a raft of brownfield expansion options.
The sequencing of those growth projects looms as a major decision for Orocobre chief executive Martin Perez De Solay, but on Monday he indicated projects were more likely to be accelerated rather than delayed once the merger was formalised.
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