<article><p class="lead">The merger of two Australian lithium producers Orocobre and Galaxy Resources will be rebranded as Allkem with upstream, downstream and exploration assets in Australia, Argentina, Japan and Canada, placing it in the top five global lithium firms and top three outside of China.</p><p>Argentina-headquartered Allkem will have existing capacity for 40,000 t/yr of lithium carbonate equivalent (LCE), which will be increased through a range of lithium concentrate (spodumene), lithium carbonate and lithium hydroxide expansion programmes.</p><p>Orocobre — headquartered in Brisbane before the merger — and Perth-based Galaxy announced a merger scheme of arrangement on 19 April, which has now been completed after passing through all regulatory and shareholder approvals.</p><p>Allkem's major production assets are the Olaroz plant in Argentina, which is being expanded by 17,500 t/yr to 42,500 t/yr of lithium carbonate with studies into a possible third stage, and the Mt Cattlin spodumene operation in Western Australia, which produces more than 200,000 t/yr of concentrate.</p><p>It is in the final stages of completing the 10,000 t/yr Naraha battery-grade lithium hydroxide plant in Japan with Toyoto Tsusho and has launched a study into a second stage for this project.</p><p>Work is also underway on the first stage of the Sal de Vida lithium brine project in Argentina, which has potential to produce around 32,000 t/yr of lithium carbonate. A second stage is also under consideration.</p><p>In Canada, the James Bay hard rock lithium project — expected to be an integrated upstream and downstream operation — is advancing permitting approvals towards becoming a significant supplier to the North American market.</p><p>Commenting on the lithium market prior to its name change, Orocobre said a structural deficit has emerged from 2021 onwards because of an absence of supply-side developments, with strong pricing needed "to provoke required supply".</p><p>Spot spodumene prices have more than doubled so far this year and lithium carbonate and hydroxide prices have also recovered strongly from lows reached in mid-2020.</p><p>Underlining the price recovery, Orocobre reported an average lithium carbonate price of $4,983/t for the July 2020-June 2021 fiscal year, compared with $5,520/t in the previous year. The average price in April-June recovered to $8,476/t and is expected to be around $9,000/t in July-December. The average cost of production was $3,860/t in 2020-21, 12pc lower than a year earlier.</p><p>Orocobre sold 13,319t of lithium carbonate in 2020-21, 48pc of which was battery grade. The sales were up by 27pc from the previous year.</p><p>The firm reported a net loss of $89.5mn for 2020-21, up from $67.2mn a year earlier. The net proforma loss for the Orocobre-Galaxy merged entity was $34.3mn, with Galaxy reporting a profit of $55mn. Allkem will start with a cash balance of over $400mn.</p><p class="bylines">By Angus Macmillan</p></article>
