Rio Tinto Disburses $6.7B for Arcadium Lithium
On 9 October 2024, Rio Tinto announced that it has reached an agreement to acquire Arcadium Lithium at USD 5.85 per share, which is nearly double the closing price of USD 3.08 on 4 October 2024 on the New York Stock Exchange (NYSE).
Based on that selling price, the deal is valued at USD 6.7 billion. Following the announcement, the share price of Arcadium Lithium (NYSE: ALTM) shot up to USD 5.50 while the share price of Rio Tinto (NYSE: RIO) slid down slightly by 1.5%. The deal is expected to close by mid-2025 following approvals from Arcadium shareholders and regulators.
“This is a countercyclical expansion aligned with our disciplined capital allocation framework, increasing our exposure to a high-growth, attractive market at the right point in the cycle.”
Rio Tinto CEO Jakob Stasholm
Lithium is one of the #CriticalMinerals that go into the manufacturing of rechargeable batteries for Electric Vehicles (EV). Despite recent drop in Lithium price on the global market, the board of Rio Tinto approved the ‘countercyclical’ transaction as it believes the long-term prospects of market are still positive and has secured quite a good deal on a premium asset.
“I am confident that this is a compelling cash offer that reflects a full and fair long-term value for our business and de-risks our shareholders’ exposure to the execution of our development portfolio and market volatility.”
Arcadium Lithium CEO Paul Graves
Arcadium is a one-year old entity which arose from the merger of two smaller miners Allkem and Livent. Its assets include #lithium mines, processing facilities and deposits in Argentina, Australia, Canada and the US. Its customer base is the who’s who in the auto industry with household names such as Tesla, BMW and GM.
Through this acquisition, Rio Tinto will also get access to the Arcadium’s advanced Direct Lithium Extraction (DLE) technology, which competitors ExxonMobil, Sunresin and Eramet are already applying.
Rio Tinto already owns and operates the Jadar lithium mine in Serbia. The Jadar production has the potential to reach 58,000 tonnes of refined battery-grade lithium carbonate (LiCO2) annually. At that point, the Jadar mine will become Europe’s largest #lithium mine.
In 2018, Rio Tinto attempted to acquire Chilean lithium miner SQM, but the deal did not go through. Now, this successful acquisition will propel the Anglo-Australian mining giant as the 3rd world’s largest producer of #lithium, behind Albemarle and SQM.