Australian lithium miner Allkem agreed to acquire U.S. rival Livent in an all-stock deal that will create a $10.6 billion producer as the sector continues consolidating amid surging demand for batteries used in electric vehicles.

The two lithium producers said in a statement Wednesday that they’ll combine in a so-called merger of equals, establishing a new company that will have its primary share listing in New York. Upon completion of the transaction, expected by year end, Allkem shareholders will own about 56% of the merged company and Livent investors will hold the rest.

The combination will create a lithium producer with mines in Argentina and Canada with output equivalent to about 7% of global supply in 2023. The new entity will become the world’s third-biggest lithium producer in terms of estimated capacity by 2027, the companies said in a presentation.

Shares of Livent rose 2.8% to $24.92 at 10:56 a.m. in New York, after earlier gaining as much as 4.2%. Allkem closed 0.6% higher in Australia while its Canadian shares surged 9.6%, the biggest intraday jump since March 28.

A slump in prices of lithium carbonate, a semi processed form of the key metal used in EV batteries, is fueling a boom in merger activity as it is seen as an effective way to expand capacity rather than developing new projects from scratch. The drop in share valuations for some mines is making them more attractive to buyers who want to grab a slice of a market that’s a major part of the transition to cleaner energy.

The world’s top producer Albemarle is pursuing Australia’s prospect Liontown Resources, while Chinese producer Tianqi Lithium recently made an unsuccessful attempt to acquire Essential Metals. Iron ore giant Fortescue Metals said last week it’s looking for lithium assets in South America.

“Lithium producers need to get much bigger, have far more ambition than has been shown to date, and become the next generation of major ‘commodity’ houses,” Simon Moore, head of consultancy Benchmark Mineral Intelligence, said in a LinkedIn post.

Livent Chief Executive Officer Paul Graves will lead the new company, while Allkem director and former Woodside Energy head Peter Coleman will be chairman. Allkem CEO Martín Pérez de Solay will provide consulting services to help facilitate the integration.

“As a combined company, we will have the enhanced scale, product range, geographic coverage, and execution capabilities to meet our customers’ rapidly growing demand for lithium chemicals,” Graves said in the statement.