Rio Tinto is in talks to acquire American lithium producer Arcadium Lithium, with both companies confirming the discussions, though no financial details have been disclosed. They both said that talks were non-binding and and it was uncertain if an agreement would be reached or if negotiations would continue.
The market anticipates that if the deal goes through, Rio Tinto could become the third-largest lithium supplier globally, trailing only SQM and Albemarle. Industry analysts predict that the merged entity may account for about 10% of the world’s lithium supply by 2030. Arcadium Lithium currently has a market capitalization of approximately $3.31 billion.
As the world undergoes an energy transition, precious metals used in EV batteries and energy storage are becoming increasingly important. Despite an 80% drop in lithium prices over the past two years, demand for lithium is expected to surge over the next decade due to increased production of lithium-ion batteries.
According to Reuters, if Rio Tinto successfully acquires Arcadium Lithium, it will gain access to the latter’s lithium mines and production facilities located in Argentina, Australia, Canada, and the US, as well as a customer base that includes Tesla, GM, and BMW. The transaction is estimated to be valued between $4 billion and $6 billion (US), with a premium of approximately 20% to 80%.
Arcadium expects its total sales of lithium hydroxide and lithium carbonate to increase by 25% year-over-year in Q2 of 2024 and has announced plans to boost production in Argentina.
Rio Tinto appears to be diversifying its portfolio beyond its traditional iron ore, copper, and aluminum businesses by entering the lithium sector. The company faces challenges in developing the Jadar lithium project in Serbia, which, if successful, could become Europe’s largest lithium mine.
Arcadium Lithium was formed on January 4 of this year through a stock merger between Allkem and Livent. The company operates globally, with operations in Argentina, Australia, Canada, China, Japan, the UK, and the US, making it one of the largest integrated lithium chemical producers worldwide. Since the beginning of the year, Arcadium’s stock has fallen by about 55%. However, following reports of the acquisition talks last Friday, Arcadium’s shares surged by 35% in the US and 46% in Australia this Monday.
Source: WeChat Official Account—青蓝能源
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