Lithium | Rio Tinto in Talks to Acquire Lithium Producer Arcadium

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Lithium | Rio Tinto in Talks to Acquire Lithium Producer Arcadium

Date：2024-10-08

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Keyword tags： Lithium Rio Tinto Arcadium

Mining giant Rio Tinto is in talks to acquire U.S. lithium producer Arcadium Lithium, with both companies having confirmed the potential acquisition. However, no financial details of the negotiations have been disclosed. Both companies also stated that the approach is non-binding and there is no certainty that any transaction will be agreed to or will proceed.

The market anticipates that if this deal is completed, Rio Tinto is expected to become the world's third-largest lithium supplier, following SQM and Albemarle. Industry analysts believe that by 2030, the combined group could account for approximately 10% of the global lithium supply. Arcadium Lithium's current market value is around $3.31 billion.

As the world transitions to energy transformation, the precious metal used in electric vehicle batteries and energy storage is becoming increasingly important. Despite an 80% drop in lithium prices over the past two years, the demand for lithium is expected to surge in the coming decade as the production of lithium-ion batteries accelerates.

According to Reuters, if Rio Tinto successfully acquires Arcadium Lithium, Rio Tinto will gain access to the latter's lithium mines and other production facilities in Argentina, Australia, Canada, and the United States, as well as a customer base that includes Tesla, General Motors, and BMW. Reuters also reported that the deal could be valued between $4 billion and $6 billion, with a premium of about 20% to 80%.

Arcadium projects a 25% year-on-year increase in the combined sales volume of lithium hydroxide and lithium carbonate for the second quarter of 2024, and the company also announced plans to ramp up production in Argentina.

Rio Tinto appears to be diversifying its existing portfolio of iron ore, copper, and aluminum, and entering the lithium sector. The company has been facing challenges in the development of the Jadar lithium project in Serbia. If the Jadar project proceeds smoothly, it could become largest lithium mine in Europe.

Arcadium Lithium was formed upon the completion of the stock merger of Australian company Allkem and U.S. company Livent on January 4th of this year, and its business spans globally, including Argentina, Australia, Canada, China, Japan, the United Kingdom, and the United States, making it one of the world's largest integrated lithium chemical producers. Arcadium's stock has fallen about 55% since the beginning of the year. However, after the media reported the aforementioned acquisition talks last Friday, Arcadium's listed company stocks in the United States soared by 35% on Monday, and the Australian listed company stocks soared by 46%.

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