This acquisition values Arcadium's shares at $5.85 per share, representing a 90% premium over Arcadium's closing price of $3.08 per share on October 4th and a 39% premium over the company's average share price since its inception on January 4th, 2024.

Arcadium Lithium currently has an annual production capacity of 75,000 metric tons of lithium carbonate equivalent (LCE), including lithium hydroxide and lithium carbonate, with plans to more than double its capacity by the end of 2028. The company is also a leader in lithium chemical manufacturing and extraction processes, such as hard-rock mining, conventional brine extraction, and direct lithium extraction (DLE). Arcadium operates globally with approximately 2,400 employees across Argentina, Australia, Canada, China, Japan, the United Kingdom, and the United States. 

Rio Tinto's acquisition comes at a favorable time in the lithium market cycle, following a significant decline in spot lithium prices of over 80% from their peak. The company anticipates significant long-term demand growth in the lithium sector, driven by the increasing use of electric vehicles and energy storage solutions. Rio Tinto expects the lithium demand to grow at a compound annual growth rate of over 10% through to 2040, potentially leading to a supply deficit.

The acquisition, which has been unanimously approved by the boards of both companies, is expected to close by mid-2025, subject to Arcadium shareholder and regulatory approvals.

Rio Tinto is also pursuing the development of the Jadar lithium project in Serbia but is faced with challenges. The Serbian opposition, along with local activists and environmentalists, has been strongly opposing Rio Tinto's Jadar lithium mine and processing facility. However, on October 11th, the Serbian Parliament rejected the opposition's proposal to ban lithium mining.

According to Reuters, the current lithium industry cycle has also presented acquisition opportunities for a couple of lithium companies. Sigma Lithium from Brazil stated in April that it would not sell its acquired lithium assets despite the low lithium prices. The acquisition of Arcadium by Rio Tinto has also made Albemarle more attractive to potential buyers, which recently paused the expansion of its Australian lithium production line due to the ongoing decline in lithium prices. Oil companies such as Chevron, Saudi Aramco, Exxon Mobil, and Warren Buffett's Occidental have also shown interest in the lithium industry. Australian iron ore miner Fortescue is seeking to acquire stakes in lithium miners in Canada and Portugal. The lithium giant SQM has been counter-cyclically expanding, acquiring shares in Australian Wesfarmers and Hancock lithium mining companies in recent years, as well as investing in lithium assets in Sweden, Namibia, and the United Kingdom. In August, SQM announced to launch SQM International Lithium to explore its lithium business expansion outside of Chile, with an objective to increase SQM's lithium production volumes by at least 100,000 metric tons of LCE per year by the end of this decade.