Sociedad Química y Minera de Chile (SQM), the world’s second-largest lithium producer, has agreed to buy Australian miner Azure Minerals Ltd for A$1.63 billion ($1.03 billion) in cash, announced Thursday. The deal is the latest in mergers and acquisitions in the booming lithium sector, driven by the surging demand for electric vehicles (EVs) and battery storage.
Azure Minerals owns a 60% stake in the Andover lithium project in Western Australia, one of the most lithium-rich regions in the world. The project has shown “exceptional” drilling results and can potentially be a major supply source for the global lithium market. SQM, which already holds a 19.99% interest in Azure, increased its offer by 52% to A$3.52 per share after Azure rejected a previous non-binding bid of A$2.31 per share in August.
The Azure board has unanimously recommended the transaction, subject to an independent expert’s opinion and other customary conditions. Azure’s managing director Tony Rovira said the deal gives Azure shareholders a “compelling opportunity” to de-risk their investment and realize certain value at an attractive premium.
SQM is expanding its presence in Australia as it faces uncertainty over its contract in Chile, which expires in 2030. The company is in talks with state-owned Codelco for a new contract under a public-private partnership model, in which it would give up a majority stake in future operations. SQM’s chief executive, Ricardo Ramos, said that the acquisition of Azure will strengthen SQM’s position as a leading lithium producer and will enhance its portfolio of high-quality assets.
The deal comes amid a flurry of activity in the Australian lithium sector, as large mining companies and battery manufacturers compete to access the key raw material for EVs and renewable energy. Several deals have been announced or attempted in recent months involving players such as Rio Tinto, Tesla, Albemarle, Livent, Codelco, and Tianqi Lithium. Australia is the world’s largest lithium producer, accounting for over half of the global output.
However, the lithium market is also facing volatility and challenges, as prices have fallen sharply from their record highs earlier this year. Analysts have warned of a looming oversupply and increased competition from new entrants and technologies. The World Economic Forum has predicted that the global demand for lithium will reach three million tonnes by 2030, up from about 300,000 tonnes in 2020.
Despite the uncertainties, many industry experts remain optimistic about the long-term prospects of lithium and its role in the transition to a low-carbon economy. They believe the increasing adoption of EVs and renewable energy will continue to drive the demand for lithium and related products. They also expect that innovation and collaboration will help overcome lithium production and use’s technical and environmental challenges.
Source: Mining.com
