Rio Tinto announced it will acquire U.S. lithium producer Arcadium Lithium for $6.7 billion. The deal will be an all-cash transaction at $5.85 per share. This represents a 90% premium to Arcadium’s October 4 closing price of $3.08 per share.
Arcadium Lithium’s market value stands at $4.56 billion. Shares have rallied 37% so far this week. If finalized, this acquisition will position Rio Tinto as one of the largest suppliers of lithium.
It would rank just behind Albemarle and SQM. Rio Tinto CEO Jakob Stausholm described the purchase as a “significant step forward.” It boosts the company’s long-term strategy of creating a world-class lithium business alongside its leading aluminum and copper operations. Arcadium Lithium CEO Paul Graves expressed confidence in the deal.
He stated that the cash offer reflects the full and fair long-term value of their business and mitigates risk for shareholders.
Rio Tinto expands lithium portfolio
The acquisition will enable Arcadium to accelerate and expand its strategy for the benefit of its stakeholders, including customers, employees, and local communities.
This move comes at a time when mining companies are scrambling to secure essential minerals vital for the global energy transition. Recently, lithium prices have been pressured by Chinese oversupply. The benchmark 99.2% lithium carbonate price has fallen over 20% year-to-date to $10,800 per metric ton, according to FactSet data.
In recent industry developments, a proposed mega merger between BHP Group and Anglo American fell through. BHP decided not to make a firm offer. This was part of an effort to create a copper mining powerhouse to support the green energy transition.
Analysts at CreditSights, led by Wen Li, noted that mergers and acquisitions are likely a more efficient way for Rio Tinto to quickly gain lithium exposure compared to investing in greenfield projects in high-risk areas that may not pan out. The deal will allow Rio Tinto to not only add lithium assets but also quickly expand through brownfield investments. This acquisition marks a significant chapter in Rio Tinto’s expansion into the lithium market.
It underscores the company’s commitment to supporting the global shift towards sustainable energy sources.
