Lithium industry giants are still optimistic about future demand

Although prices have fallen recently due to concerns about the slowdown in electric vehicle purchases, most overseas lithium manufacturers, including Livent, have expressed continued optimism about long-term demand.

US lithium giant Livent started meeting Allkem's Australian investors Monday to vote to approve a $10.6 billion merger that would create the world's third-largest producer amid weak lithium demand and prices. If Allkem shareholders vote in favor of the deal on Dec. 19, Livent CEO Paul Graves will take the top job at the combined company, Arcadium Lithium.

Merging the two companies would create the world's third-largest lithium producer, with assets spread across Australia, Canada and Argentina. Albemarle in the United States and SQM in Chile are the top two manufacturers. Australia, a major global lithium supplier, has seen brisk onshore acquisition activity this year, with at least two potential deals for global lithium producers being blocked. That includes Albemarle abandoning its $4.3 billion purchase of Liontown Resources.

But for Arcadium lithium, they do not need to cooperate with other Australian lithium companies because it already has the funds and skills required to develop projects. Perhaps it would make sense for some lithium producers to choose an experienced Australian miner as a partner. But for Arcadium lithium, this is not the case.

Although prices have fallen recently due to concerns about the slowdown in electric vehicle purchases, most overseas lithium manufacturers, including Livent, have expressed continued optimism about long-term demand. Two weeks ago, Livent reported lower-than-expected quarterly profit and cut its annual revenue and earnings forecasts, citing expansion delays in Argentina. The companies estimate the deal will create approximately $125 million in annual pre-tax operating cost synergies through 2027.