Jakob Stausholm, chief government officer of Rio Tinto Ltd., throughout a Bloomberg Tv interview in New York, US, on Thursday, Sept. 26, 2024.
Victor J. Blue | Bloomberg | Getty Pictures
Rio Tinto has been holding talks to purchase lithium miner Arcadium, three sources with direct data of the negotiations stated, a deal that may make Rio the third-largest producer of the electrical automobile battery metallic.
Talks have been ongoing and continued in London this week throughout the LME Week convention, one of many sources stated. A suggestion is predicted to come back within the close to future, based on the second supply. Talks are ongoing and will not essentially end in a deal, the sources stated.
Philadelphia-based Arcadium might be valued between $4 billion to $6 billion or greater, the third supply stated. Not one of the sources have been licensed to debate the negotiations publicly.
The deal would vault Rio into one of many world’s largest suppliers of the ultralight metallic, behind solely Albemarle and SQM, simply as demand is predicted to surge later this decade amid rising use of lithium-ion batteries for EVs and client electronics.
The latest stoop in lithium costs, which is due partially to Chinese language oversupply, has pushed Arcadium’s shares down greater than 50% since January, making it a pretty takeover goal.
It was not instantly clear if a transaction would primarily embody money, inventory or a mix of each. Arcadium has chosen two funding banks to deal with its negotiations with Rio, based on the second supply.
By shopping for Arcadium, Rio would achieve entry to lithium mines, processing services and deposits throughout 4 continents to gas a long time of progress, in addition to a buyer base that features Tesla, BMW and Normal Motors.
Arcadium and Rio Tinto declined to remark.
The Anglo-Australian mining firm is already one of many world’s largest producers of copper – used to make wiring, development gear, electronics and different gadgets – in addition to iron ore and different metals.
Arcadium has round 2,400 staff throughout 9 nations. Roughly 84% of its income comes from Asia – the prevailing international heart for lithium demand – giving it progress potential as EV tasks ramp up throughout the Western Hemisphere, particularly these supported by the U.S. Inflation Discount Act.
Rio faces sturdy opposition in Serbia to its proposed Jadar mine, for which it lately regained its license. Local people members have repeatedly pressured Belgrade to dam the challenge, which has the potential to produce a lot of Europe’s wants of the battery metallic.
Arcadium believes it’s unlikely Rio will ever be capable of develop the Serbian challenge, the second supply stated.
Rio might additionally profit from Arcadium’s experience in direct lithium extraction, a rising section of the lithium trade that goals to mechanically filter the metallic from brines.
No firm has commercially launched a DLE course of with out evaporation ponds, however Arcadium has efficiently been utilizing DLE for the reason that Nineteen Nineties with ponds in Argentina and its engineers are broadly seen as international specialists.
Rio paid $825 million in 2022 for a DLE challenge in Argentina that has but to supply the metallic.
‘The total bundle’
Arcadium was shaped solely in January by the merger of U.S.-based Livent and Australia-based Allkem, with every firm getting an equal variety of slots on the corporate’s 12-person board of administrators.
Hypothesis of a possible tie-up between Arcadium and Rio has floated for weeks.
“Arcadium affords Rio the complete bundle,” Scotiabank analysts stated on Sept. 10, including that “the case (for a buyout) has strengthened.”
At a presentation to traders on Sept. 19, Arcadium laid out an aggressive progress technique to just about triple its adjusted earnings by 2028 by growing its lithium tasks throughout the globe.
Rio’s curiosity in Arcadium comes amid a rising wave of deal curiosity throughout the mining trade, particularly for important minerals wanted to energy the worldwide vitality transition.
BHP – the world’s largest miner – earlier this yr made an unsuccessful bid for smaller rival Anglo American. Glencore, BHP and others are seen as potential bidders for different important minerals tasks.
