Australian lithium company Sayona Mining (ASX:SYA,OTCQB:SYAXF) and US-based Piedmont Lithium (ASX:PLL,NASDAQ:PLL) have announced a merger agreement that would create a consolidated entity valued at approximately US$623 million.

This move aims to strengthen their positions in the global lithium supply chain and enhance operations in North America and beyond.

The agreement involves an all-stock transaction, with Sayona acquiring Piedmont to become the parent company. Under the terms, existing Piedmont shareholders will receive Sayona American Depository Shares (ADS) or Sayona shares listed on the Australian Securities Exchange (ASX) in proportion to their holdings.

Ownership of the merged company will be split approximately evenly post-merger. Shareholders of both companies are expected to hold equal stakes in the newly formed entity.

The combined portfolio of the merged entity will include lithium assets across North America, Australia and Ghana.

The two companies are already partners in North American Lithium (NAL), a spodumene mining operation in Québec, Canada. Currently, Sayona holds a 75 percent stake in NAL, with Piedmont owning the remaining 25 percent.

The merger will consolidate NAL’s ownership under the newly formed entity, allowing for greater operational efficiency and flexibility in securing funding or government support if required.

NAL began operations in early 2023 and has produced approximately 140,000 metric tons of spodumene concentrate since its restart. The facility is targeting an annual production rate of 226,000 metric tons. Half of its output is sold to Piedmont under an existing offtake agreement.

Despite its production capacity, NAL faced financial losses in the third quarter of 2024, reflecting the current state of the lithium market.

Sayona’s portfolio features three lithium projects in Québec and a series of mining leases in Western Australia.

Meanwhile, Piedmont contributes its lithium projects in North Carolina and Ghana, developed in partnership with Atlantic Lithium (ASX:A11,LSE:ALL,OTCQX:ALLIF).

The merger seeks to capitalize on these complementary assets to create a more integrated and scalable operation.

Keith Phillips, President and CEO of Piedmont, said that the merger will enable the company to focus on future development while adapting to less than favorable industry conditions.

“The merger financing, corner-stoned by leading mining private equity group RCF, will enable us to weather the current industry downturn while making intelligent investments in our growth projects to be positioned for the recovery in lithium markets that we expect in the medium-term,” Phillips said in the official announcement.

The merger decision continues an ongoing trend in the lithium sector toward consolidation.

Recent months have seen increased M&A activity, notably Rio Tinto’s (ASX:RIO,NYSE:RIO,LSE:RIO) US$6.7 billion acquisition of Arcadium Lithium (NYSE:ALTM,ASX:LTM), as companies seek to strengthen their market positions amid fluctuating demand and pricing dynamics.

Securities Disclosure: I, Giann Liguid, hold no direct investment interest in any company mentioned in this article.