Sayona, Piedmont Announce Plans for Lithium Merger

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--Australia-based Sayona Mining Limited (Milton, Queensland) will be the parent of a new entity formed through a merger with Piedmont Lithium (NASDAQ:PLL) (Bessemer City, North Carolina), both of which already operate one of the largest lithium mining operations in North America.

Piedmont and Sayona agreed Tuesday to form a 50:50 joint venture, presently dubbed MergeCo, through an all-stock transaction. A combined equity haul of $99 million to support the merger ensures "MergeCo is well positioned to accelerate growth within its enlarged portfolio," the companies said.

Both companies are entrenched in the lithium mining sector. Piedmont last year started producing spodumene, a lithium-rich mineral, at the North American Lithium (NAL) operation in Quebec, making its first commercial shipment of about 20,500 metric tons of spodumene concentrate in early August.

NAL started operations in 2018, although work was suspended in 2019 after the price of lithium products collapsed. It was acquired in 2021 by Sayona Quebec, a joint venture between Sayona and Piedmont.

MergeCo will be domiciled in Australia.

"This merger marks a transformative step for Sayona and Piedmont, creating a leading North American lithium producer with the scale and capabilities to meet the growing demand for lithium products," said Lucas Dow, the chief executive officer of Sayona.

Piedmont shipped out about 31,000 dry metric tons of spodumene concentrate during the three-month period ending September 30, more than double levels from the second quarter.

The amount of concentrate produced, some 52,100 metric tons, marked a 5% increase over second-quarter levels, though levels were up 120% over the same period last year. Its previous record, set in March, was 40,439 tons worth of production.

The merger between Piedmont and Sayona is intended to "create a simpler and stronger lithium business that is well-positioned to grow through cycles."

Similar to 2019, when a market crash prompted curtailments at NAL, lithium markets are facing significant headwinds as take-up in the vehicle sector has been slow. Toyota Motor Corporation (NYSE:TM) (Toyota City, Japan) and Ford Motor Company (NYSE:F) (Dearborn, Michigan) both scaled back their electric vehicle programs this year, in part due to sticker shock and range anxiety from consumers.

Last week, Albemarle Corporation (NYSE:ALB) (Charlotte, North Carolina), the largest lithium producer in the world, reported a $1.1 billion loss during the quarter on the back of the weak market. The company added that it would shed about 6% of its global workforce and cut its planned capital spending for next year by 50% relative to 2024 levels of about $850 million.

Albemarle reported that "recent pricing" on the lithium markets is about 25% below levels from the fourth quarter and 40% lower than during the second half of last year.

On the merger, the board of directors at Piedmont are recommending unanimous approval from shareholders. Dow from Sayona will serve as the new entity's chief executive officer.

"Subject to shareholder approval of the transaction, MergeCo is intended to be renamed at, or shortly after, the transaction completion," the companies added.

The deal is expected to close during the first half of the year, provided it clears regulatory hurdles.

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