Rio Tinto, an Australian-British mining and metals company, has announced the acquisition of US lithium producer Arcadium Lithium for $6.7 billion. The deal elevates the world's second-largest miner to a major lithium producer.
The addition of Arcadium's lithium business to its portfolio strengthens Rio Tinto's presence in the energy transition sector alongside its established aluminium and copper operations. "Acquiring Arcadium Lithium is a significant step forward in Rio Tinto’s long-term strategy, creating a world-class lithium business," CEO Jakob Stausholm said at a press conference.
Under the terms of the deal, Rio Tinto will pay $5.85 in free cash for each Arcadium share, representing a 90 percent premium to the US company's share price at the close of trading on October 4. The total deal value is $6.7 billion.
“Lithium is one of the cornerstone materials needed to support the energy transition, and with over 80% of its global production directed toward electric vehicles and energy storage, it is expected to remain the preferred material for battery energy strorage due to its unmatched energy density and efficiency and owing to its fundamental chemical properties,” Stausholm said. He said lithium demand is expected to grow at a double-digit rate through 2040, leaving the market in deficit by the end of the decade.
The deal was announced at a time when spot lithium prices have fallen more than 80% from their peak, positioning Rio Tinto to benefit from what it sees as significant long-term growth. “We have been patiently studying the sector for a long time and believe now is the time to acquire a premium lithium business,” Stausholm said.
Projects that Arcadium had previously slowed due to financial constraints are expected to advance at a faster pace under Rio Tinto, bringing an additional 50,000 tonnes of lithium carbonate and spodumene into production ahead of schedule.
Arcadium is a vertically integrated player with expertise in the production and recovery of lithium chemicals from rocks, traditional brine extraction and direct lithium recovery sources. It has a production capacity of 75,000 tonnes of lithium carbonate equivalent and plans to more than double that by the end of 2028. The transaction, approved by the boards of both companies, will be implemented under a structured agreement and is expected to close by mid-2025.
The acquisition of Arcadium will make Rio Tinto the world’s third-largest lithium producer, behind only US-based Albemarle and Chile’s SQM. Arcadium was formed in January 2024 through the merger of US-based Livent and Australia’s Allkem. Arcadium has facilities in Argentina, Australia, Canada, China, Japan, the UK and the US. The company produces lithium hydroxide, which is a key component for lithium greases, paints, batteries for electric vehicles, etc.
Lithium prices have fallen by almost 22% since the beginning of the year amid an oversupply of this raw material on the market. Arcadium shares have lost almost 60% of their value since the beginning of the year. However, after the first reports of negotiations with Rio Tinto to buy the American company's shares, they have already grown by 37%.
Hélène Tarin, Editor-in-Chief of the Asian Bureau, Rough&Polished
