After a $10.6 billion merger in the industry fuelled anticipation for greater consolidation among lithium miners, Australian-listed lithium miners rose on Thursday.

On Wednesday, Allkem Ltd. (AKE.AX) and Livent (LTHM.N) announced a merger to establish the world’s third-largest lithium producer, whose demand is estimated to rise more than five-fold by 2030.

Tesla Inc. (TSLA.O), General Motors (GM.N), and BMW (BMWG.DE), who are ravenous for lithium supplies, may benefit from consolidating lithium manufacturers.

Allkem rose 18.6% and Livent 5.2% in New York overnight, driving a sector rally that saw Australia’s largest independent lithium producer Pilbara Minerals (PLS.AX), increase 8%.

Livent competitor Lake Resources (LKE.AX) rose 13%. After rebounding, Liontown (LTR.AX), Core Lithium (CXO.AX), and Sayona Mining (SYA.AX) rose 2%–5%.

Cash-rich miners drive Australia’s resources sector. For example, lithium manufacturers have printed money for two years as prices climbed six-fold before plunging abruptly in 2023.

“We saw the lithium price remain not far from record highs for some time which means producers are reasonably cashed up,” said Fat Prophets private wealth manager David Lennox, who has Allkem shares.

More industry takeovers are likely. Everyone wants in given demand expectations.”

RBC analyst Kaan Peker in Sydney said miners had enough cash for development initiatives like chemical conversion plants and dividends or takeovers.

Peker said, “M&A is set to continue” in the industry since miners that grow in size and scale can provide more to clients, secure market share, and save costs.

Allkem CEO Martin Pérez de Solay justified combining with Livent to offer a wider selection of lithium goods to major clients like Toyota, which controls 6.16% of Allkem shares through its trading subsidiary.

In an interview, he added that Toyota is “quite positive” about the agreement.

“We are all looking forward jointly with them on a larger and deeper business relationship with the Toyota group,” he added.

Reuters requested a statement from Toyota Tsusho, which controls Allkem shares.

Toyota predicted this week that its battery electric car sales will climb five-fold by March 2024, increasing lithium demand.

RBC’s Peker said OEMs like automakers had avoided upstream risk in mines since it’s not their core skill, but they may purchase in this wave of M&A.

They worry about feedstock market constraints. “If one breaks rank, OEMS may acquire upstream assets, something more meaningful than small company stakes, with significant offtake where they can control their destiny,” he added.

In March, Volkswagen (VOWG_p.DE) said it would invest in mines to lower battery cell prices, satisfy half of its demand, and sell to third parties.

Albemarle’s $3.7 billion deal for Liontown and Tianqi-Igo’s offer for Essential Metals Ltd (ESS.AX) were lithium industry takeovers this year.