Ganfeng Lithium has agreed to acquire Canadian exploration and development company Millennial Lithium in a $280m (C$353m) deal.

The move comes amid the surging demand for lithium, which is an important component in electric vehicle batteries.

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Ganfeng’s subsidiary GFL International has offered to acquire all of the outstanding common shares of Millennial for a price of $2.82 (C$3.60) per share in cash.

Millennial owns two lithium brine projects in Argentina, namely Pastos Grandes and Cauchari East. These projects are located close to Ganfeng’s existing operations.

The advanced-stage Pastos Grandes Lithium Project, which covers a 12,619ha area, is located in Salta Province.

Located on the east side of Cauchari-Olaroz Salar in Jujuy, the Cauchari East lithium project is in the early exploration stage.

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Ganfeng chairman and president Li Liang Bin said that the Millennial’s 100%-owned Pastos Grandes Project is an ‘attractive’, advanced stage lithium project. It is considered highly complementary to the firm’s existing footprint in Argentina.

The deal has already received unanimous approval from Millennial’s board.

Millennial president and CEO Farhad Abasov said: “Millennial’s board and management believe that the arrangement provides a very attractive opportunity for Millennial’s shareholders to realise full liquidity at a substantial premium to the current share price.

“Ganfeng would bring significant technical lithium expertise to Pastos Grandes gained through their partnership with Lithium Americas Corp. at Cauchari and other projects worldwide.”

The transaction awaits the approval of regulators and shareholders, with completion anticipated in the fourth quarter of this year.