Rio Tinto Acquires Arcadium Lithium for $6.7 Billion

By Clara Denina and Melanie Burton
LONDON/MELBOURNE (Reuters)

Rio Tinto has agreed to buy U.S. based Arcadium Lithium for $6.7 billion, making it the world's third largest miner of lithium, essential for electric vehicle batteries.

The deal will be executed at $5.85 per share in cash, a nearly 90% premium to Arcadium's closing price of $3.08 on October 4. As the largest producer of iron ore, Rio aims to transform into a processor of high-end, low carbon materials crucial for the energy transition.

Despite the current oversupply, CEO Jakob Stausholm expressed confidence in robust long-term demand for lithium. The acquisition grants Rio access to lithium mines, processing facilities, and deposits located in Argentina, Australia, Canada, and the U.S., with established customers including Tesla, BMW, and General Motors.

Lithium prices have decreased due to oversupply from China and a slowdown in electric vehicle sales, but Stausholm expects a supply shortfall by the decade's end due to increased demand.

Stausholm described the acquisition as a strategy to secure quality assets at a favorable price, emphasizing their aim for battery-grade lithium alongside operational capabilities. This purchase aligns with their existing lithium assets and growth strategies while preserving Arcadium's staff.

While the acquisition won't significantly impact Rio's capital expenditure plans of up to $10 billion in 2025-2026, Arcadium's existing active mines and advanced processing facilities will complement Rio's diverse output of minerals.

Arcadium shares fell more than 37% this year, now holding a market capitalization of $4.56 billion. Rio's current market capitalization stands at $112.4 billion. The acquisition is expected to finalize by mid-2025 and has proceeded more smoothly than BHP's unsuccessful $49 billion takeover attempt of Anglo American earlier this year.