Rio Tinto, the world’s second-largest mining company, has expressed interest in acquiring U.S. lithium producer Arcadium, as confirmed by both companies in separate statements on Monday. No financial details were disclosed, and Rio Tinto cautioned that there’s no certainty a deal will be finalized.
Arcadium’s market value is currently $3.31 billion, according to LSEG data. Following the news, the company’s Australian-listed shares surged by over 42% during early trading on Monday. If the acquisition goes through, Rio Tinto would become one of the top global lithium suppliers, trailing only industry leaders Albemarle and SQM. The deal would grant Rio Tinto access to lithium mines and processing facilities spanning four continents, a significant advantage as mining companies race to secure minerals essential for the global energy transition.
Lithium prices have been under pressure due to an oversupply from China, with the benchmark price for 99.2% lithium carbonate falling more than 20% year-to-date to $10,800 per metric ton, according to FactSet data.
Analysts have noted that large-scale mergers and acquisitions are increasingly seen as the primary avenue for major mining companies like Rio Tinto and BHP to grow. Saul Kavonic, head of energy research at MST Marquee, explained that Rio Tinto had likely been eyeing Arcadium for years, waiting for a downturn in lithium prices to pursue a deal. He emphasized that Rio Tinto’s goal was to become a top-three producer in the lithium market and that it had struggled to achieve such a position through organic growth or smaller acquisitions.
Meanwhile, Rio Tinto has faced opposition in Serbia over its proposed Jadar lithium mine, with environmental concerns prompting local resistance to the project.
Arcadium’s latest financial results showed a projected 25% increase in lithium hydroxide and lithium carbonate sales volumes for 2024 compared to 2023. The company also plans to ramp up production in its Argentine operations.
Kavonic added that the final decision will hinge on Rio Tinto’s willingness to pay a significant premium, influenced by their long-term outlook on lithium prices. Both Rio Tinto and Arcadium declined to comment further.
Other Australian-listed lithium stocks also saw gains, with Liontown Resources up 12.84%, Mineral Resources rising 4.94%, and Pilbara Minerals and IGO trading 3.11% and 3.71% higher, respectively.
