Sources: Rio Tinto is in negotiations to purchase lithium miner Arcadium.
Rio Tinto is in talks with Arcadium to purchase its lithium mine, according to three sources who have direct knowledge of these negotiations. This would make Rio Tinto the third largest producer of battery metal for electric vehicles.
One source said that talks have continued and been ongoing in London during the LME Week Conference. According to a second source, an offer should be forthcoming in the near term. The sources stated that talks are continuing and could not necessarily lead to a deal.
The third source stated that Arcadium, a Philadelphia-based company, could be worth between $4 billion and $6 billion or more. The sources are not authorized to speak publicly about the negotiations.
Rio will become one of the largest suppliers of ultralight metal in the world, only behind Albemarle, SQM and SQM. This is just at the time when demand for lithium-ion battery packs used in EVs and consumer electronic devices are expected to increase.
Arcadium shares have fallen more than 50% in value since January due to the recent drop in lithium prices. This is partly due to Chinese oversupply.
It wasn't immediately clear whether a transaction would include a mix of cash and stock. According to the second source, Arcadium selected two investment firms to handle its Rio negotiations.
Rio will gain access to lithium deposits, processing facilities, and mines on four continents that can fuel decades of growth. Rio's customer base includes Tesla, BMW, and General Motors.
Rio Tinto and Arcadium declined to comment.
Anglo-Australian Mining Company is one of the largest producers in the world of copper, which is used for wiring, construction materials, electronics, and other devices.
Arcadium employs around 2,400 people in nine countries. Around 84% of Arcadium's revenue comes from Asia – the global center for demand for lithium – giving it potential growth as EV projects ramp-up across the Western Hemisphere.
Rio is facing strong opposition from Serbians regarding its proposed Jadar Mine, for which the company recently received a license. Local residents have repeatedly urged Belgrade to stop the project. The mine has the potential of supplying much of Europe’s battery metal needs.
Arcadium is of the opinion that it's unlikely Rio will be able develop the Serbian Project, said the second source.
Rio could also gain from Arcadium’s expertise in the direct extraction of lithium, a growing sector of the lithium industry which aims to mechanically extract the metal from brines.
Arcadium, a company that has been successfully using DLE in Argentina since the 1990s and whose engineers are regarded as experts worldwide, is one of the few companies to have commercially launched DLE without evaporation pools.
Rio paid $825,000,000 in 2022 for an Argentine DLE project that has not yet produced the metal.
The full package
Arcadium, a 12-member board of directors comprised of representatives from both Livent (based in the U.S.) and Allkem (based in Australia), was only formed by combining the two companies.
For weeks, rumors have been circulating about a possible tie-up between Arcadium Rio.
Analysts at Scotiabank said that on September 10, "Arcadium provides Rio with the complete package." They added that "the case for a buyout has become stronger."
Arcadium presented to investors a growth strategy that would nearly triple the adjusted earnings of its company by 2028. This was done by developing lithium projects around the world.
Rio's interest is Arcadium coincides with a growing wave of interest from the mining industry in general, and especially in critical minerals required to power the global transition towards energy.
BHP, the world's biggest miner, failed in its bid to buy smaller rival Anglo American earlier this year. Glencore, BHP, and others could bid for other important minerals projects. (Reporting and editing by Veronica Brown, Deepa Babington and Veronica Brown; Additional reporting by David French, Divyarajagopal and Divya Denina)
(source: Reuters)
