AUSTRALIAN lithium miner Liontown Resources said it’s willing to back a new A$6.6 billion (S$5.8 billion) takeover offer from Albemarle Corp, the world’s biggest producer of the battery metal.

Albemarle has been granted due diligence after raising its cash offer by 20 per cent, in a best and final proposal, Liontown said Monday (Sep 4). The Australian miner’s shares jumped 8.8 per cent in Sydney, the most since March.

A deal would cement the stunning rise of the Australian lithium sector, where the share prices of newly founded and previously little-known companies have soared more than 10-fold amid surging demand for the metal. The race for lithium has mining heavyweights, battery manufacturers and automakers from Rio Tinto to Tesla Inc chasing deals with firms with even early-stage or pre-production projects.

Liontown, based in Perth, owns one of the most promising early-stage lithium projects in Australia, the world’s top exporter of the metal. It has supply agreements with major auto makers, including Tesla and Ford Motor.

US-based Albemarle, which already owns stakes in lithium mines in Australia and has a processing plant there, offered to acquire all of Liontown’s equity at A$3 a share. That follows a bid of A$2.50 in March.

Prices of lithium, a key ingredient in EV batteries, have halved from a peak late last year. That’s resulted in a drop in share values for some miners, helping to fuel a surge of deal activity in a market that’s a major part of the transition to cleaner energy.

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“The likelihood of a deal succeeding has materially increased,” Wilsons Advisory analysts Sam Catalano and James Karakatsanis said in a note. “This bid should provide evidence that the fundamentals underpinning the lithium sector remain sound, and recent share-price weakness across the sector presents a number of buying opportunities.” BLOOMBERG