Australian-based Talison Lithium, the world’s largest producer of lithium ore, was acquired in an offer from specialty chemicals company Rockwood Holdings, which is buying the company for C$724 million. Rockwood is paying more than 33 times Talison’s EBITDA earnings and more than double the mark-up of non-ferrous metal company takeovers which have occurred in the past two years.
Talison has been producing lithium ore at its Greenbushes mine in Western Australia for more than 25 years and accounts for one-third of the global market for lithium ore. The company has doubled production at its main mine and has increased prices this year for the ore by 25%. About one-quarter of lithium globally is extracted from ore-based reserves such as those operated by Talison and another Australian company, Galaxy Resources. The remainder comes from brine-based resources located mainly in South America.
Lithium is, of course, the key ingredient in lithium-ion batteries which are used in a variety of consumer electronic products, including mobile phones, tablets, and laptops, in addition to many electric car batteries. Other uses include playing an increasingly key role in the development of solar energy storage and in grid stabilization.
Demand for lithium ore has been growing by more than 20% a year since 2000. And this growth rate is expected to soar even higher beginning around 2015; not only as the number of electronic devices increases but as the rollout of electric vehicles around the world begins to accelerate and as lithium-ion batteries are deployed in large numbers in electricity grids and for storing solar energy.
For additional information about lithium and the takeover offer, please visit either www.talisonlithium.com or www.rockwoodspecialties.com
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