The world’s second-largest miner Rio Tinto expressed curiosity in buying U.S. lithium producer Arcadium, the 2 firms confirmed in separate statements on Monday.
No monetary specifics had been disclosed. Rio Tinto mentioned that there is no such thing as a certainty that any transaction shall be agreed to.
Arcadium Lithium’s market worth at present stands at $3.31 billion, based on knowledge from LSEG. The corporate’s Australian-listed shares jumped over 42% in early Monday commerce.
If the deal goes by means of, Rio Tinto would develop into one of many largest suppliers of lithium, trailing solely Albemarle and SQM. Rio would additionally purchase entry to lithium mines and processing crops throughout 4 continents. This transfer comes as mining firms search to safe important minerals for the worldwide vitality transition.
Lithium costs have been below strain on account of Chinese language oversupply. Costs of the benchmark 99.2% lithium carbonate have fallen over 20% year-to-date to $10,800 per metric ton, knowledge from FactSet exhibits.
Saul Kavonic, head of vitality analysis at MST Marquee, instructed World Head News that Rio Tinto had been ready for a lithium downturn with the intention to pursue M&A that may ship it a world scale lithium division.
“Arcadium has doubtless been in Rio Tinto’s crosshairs for years, however lithium costs and valuations had been excessive for a very long time,” he mentioned.
“In the end, Rio Tinto solely wished to play within the lithium area in the event that they had been going to be a high three producer,” he instructed World Head News through e mail, including that the mining big was struggling to attain a tier one lithium publicity by means of natural means, exploration or smaller scale M&A.
Rio has been encountering vital resistance in Serbia relating to its deliberate Jadar mine, which Rio believed had the potential to be a “world-class lithium-borates asset.” Residents have constantly urged Belgrade to halt the undertaking over issues the mining undertaking may pollute the encompassing setting.
In Arcadium’s latest second-quarter outcomes, the corporate projected a 25% leap in mixed lithium hydroxide and lithium carbonate gross sales volumes for 2024, in comparison with 2023. The corporate additionally asserted its intentions to ramp up manufacturing ranges in its latest expansions in Argentina.
“All of it comes all the way down to what Rio Tinto is prepared to pay, and their long run lithium value outlook,” mentioned Kavonic, who surmised that Rio would not have approached the deal with out expectations of getting to pay a cloth premium.
Rio Tinto and Arcadium didn’t instantly reply to World Head News’s requests for feedback.
Different lithium shares listed in Australia rallied. Liontown Sources rose 12.84%, Mineral Sources added 4.94%, whereas Pilbara Minerals and IGO traded round 3.11% and three.71% larger, respectively.
