If you were wondering how big the lithium-ion battery business is going to get, New Jersey-based materials group Rockwood Holdings just offered a big clue. The company is buying the Talison Lithium, the world’s largest lithium mining company, for $732 million.
Three years ago, the Australian company had to abort a planned initial public offering that put its value at less than half that sum. It ended up on a Canadian stock exchange. The price Rockwood is offering is more than 50 percent higher than the company’s previous trading price. Buying at $6.58 per share, Rockwood says the acquisition will help it serve customers, including lithium concentrate buyers in China.
Lithium is the key to rechargeable batteries like the ones found in mobile phones and laptops. It’s also important for electric vehicles, solar energy storage products and grid stabilization systems. Some projections suggest that worldwide use of the metal will double in the next eight years.
Talison has run mining operations in Western Australia for the past 25 years. It expanded its operations in June, and it now says it’s now capable of mining the equivalent of nearly two thirds of current global demand for the metal, exporting more than 350,000 metric tons of lithium per year.
Lithium prices have tripled since 2000. Talison now produces a third of the world’s supply of the metal, and Rockwood is already a big player too. The two companies, along with two others, Soc. Quimica & Minera de Chile SA and FMC Corp., account for nearly 95 percent of the market.
About a quarter of the world’s supply of lithium comes from ore mined largely in Australia. The rest is extracted from brine, largely in South America. Besides its main mines in Australia, Talison runs brine operations in Chile thanks to a 2010 merger with Salares Lithium Inc.
The Rockwood-Talison deal must still win stockholder approval and meet other standard conditions. Rockwood is paying in cash and financing the purchase partly by taking on new debt.
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