Rio Tinto, the world’s second-largest mining company, is eyeing a deal to acquire U.S.-Based lithium producer Arcadium. Both companies confirmed the news in individual statements, although no financial details have been released. While Rio Tinto emphasized that the deal is not guaranteed.
Currently, Arcadium is worth around $3.1 billion, and its Australian-listed shares saw a sudden surge of 42% after the announceon ment. If both companies move forward with the deal, it will make Rio Tinto the 3rd largest producer of Lithium, behind only Albemarle and SQM. Moreover, the deal will give Rio Tinto access to various mines and lithium processing facilities across four continents.
Lithium is one of the most in-demand minerals today, as every battery on the planet uses a Lithium-based structure. Despite this, lithium prices have faced downward pressure due to oversupply from China. The benchmark price for 99.2% lithium carbonate has dropped over 20% this year, settling at $10,800 per metric ton. Saul Kavonic, head of energy research at MST Marquee, noted that Rio Tinto had been waiting for a downturn in lithium prices before pursuing major acquisitions to establish a world-class lithium division.Arcadium, in its second-quarter report, projected a 25% increase in lithium hydroxide and lithium carbonate sales for 2024 compared to 2023, fueled by its production expansions in Argentina. This is why the M&E of Arcadium is the right choice for Rio Tinto to get a foothold in lithium.
