Global mining giant Rio Tinto today confirmed that it will be buying US-based Arcadium Lithium in a $6.7bn deal, which will make Rio Tinto a top global lithium producer once the deal completes by mid-2025.
This comes just days after the two firms publicly acknowledged discussions are happening. The all-cash transaction of $5.85/share is at a premium of 90pc to Arcadium's closing price of $3.08/share on 4 October. This placed the deal at around $6.7bn, higher than the proposed $4.2bn deal last year between another major lithium producer Albemarle and Australian lithium producer Liontown Resources, of which Albemarle eventually backed off from.
Rio Tinto and Arcadium's board of directors have approved the transaction and Rio Tinto expects the deal to be closed in mid-2025, subject to regulatory approvals and other "closing conditions", it said.
"Rio Tinto has been wanting to break into the lithium industry," said an Australian spodumene miner. "But [it] has not been making breakthroughs following its setbacks in Serbia, so this is a massive move from them, in display of their determination in the lithium industry."
"They certainly are not mucking around," said an Australia-based source in a trading house, referring to the deal amount.
Rio Tinto's $2.4bn lithium project in Serbia was delayed in 2022, following environmental licensing delays and local oppositions. A Serbian court this year overturnedthe government's decision against the project. But the project's future has recently been thrown again into uncertainty, as a proposal from the opposition to ban lithium and borate mining and exploration in the country emerged last week.
The European Green party earlier on 26 September criticised Serbian president Aleksandar Vucic for reintroducing the project, stating that was "without the needed respect for democratic standards and public involvement".
Arcadium currently has around 75,000 t/yr of lithium carbonate equivalent (LCE) production capacity, spanning across lithium hydroxide, carbonate and spodumene, said Rio Tinto, adding that the acquisition increases its exposure to a "high-growth" and "attractive" market. Arcadium earlier said its expansion projects, split across two waves, could raise its production capacity to 295,000 t/yr of LCE "beyond 2028". It earlier delayed the timeline for its first wave of expansions from 2026 to 2028 to preserve cash, but that target may now be put back on track given the acquisition, according to Arcadium's chief executive officer Paul Graves on 9 October. "If we were to accelerate those projects, it'd have been about 50,000t of lithium product in the form of spodumene or carbonate on line two years quicker than our plans today," he said, adding that acceleration of its second wave of expansions may also be possible.
Rio Tinto expects over 10pc of compound annual growth in lithium demand through to 2040, which it said will lead to a supply deficit while acknowledging that the deal is a "counter-cyclical acquisition".
This year's lithium market slump has prompted multiple output cuts or suspensions from lithium producers, with lithium firms being increasingly cautious about expansion plans. Arcadium was not spared and had to suspend some operations at its Mount Cattlin mine in Western Australia while delaying its expansions.
