Orocobre Limited and Galaxy Resources Limited announced plans for a $3.2 billion (A$4 billion) merger that would create the fifth largest global lithium chemicals company in the world. It will be the largest mining deal of 2021 to date.

In a press release, the companies said the two companies “will merge via a Galaxy Scheme of Arrangement (Scheme) pursuant to which Orocobre will acquire 100 percent of the shares in Galaxy.”

Galaxy shareholders will receive 0.569 Orocobre shares for each Galaxy share held at the scheme record date. Upon implementation of the Scheme, Orocobre shareholders will own 54.2 percent of the fully diluted share capital of the combined entity and Galaxy shareholders will own the remaining 45.8 percent.

“The logic of this merger is compelling,” Orocobre chairman, Robert Hubbard, who becomes deputy chairman of the yet to be formally named new company, said in the media statement.

Orocobre produces lithium carbonate at its Olaroz operation in Argentina, while Galaxy has a mine in Australia and growth projects in Canada and South America.

“The merger consolidates the combined group’s position in Argentina and will give us significant operational, technical and financial flexibility to deliver the full value of our combined portfolio,” Martín Pérez de Solay, current chief executive officer and managing director of Orocobre, said.

“From Galaxy’s perspective, we were looking for a partner which had deep in-country Argentinian experience and we’ve got that in Orocobre,” said Simon Hay, Galaxy’s CEO, who will take on the role of president of international business at the new company.

The only lithium chemical firms that would have a bigger market capitalization than the merged Orocobre and Galaxy are China’s Ganfeng Lithium, Albemarle, SQM and Tianqi. The next biggest companies are Australia’s Pilbara Minerals, US firm Livent and Canada’s Lithium Americas.