Rio Tinto To Become One Of World's Top Lithium Producer With $6.7B Arcadium Buy

Rio Tinto agreed to acquire U.S. based Arcadium Lithium in about $6.7 billion all-cash deal, which would cement the company as the one of the largest lithium producers in the world and strengthening its role in the growing electric vehicle battery supply chain.

Rio Tinto will pay Arcadium $5.85 per share, representing a premium of 90% to Arcadium's $3.08 closing price on Oct. 4, 2024, a statement from press release revealed.

Rio Tinto, one of the largest iron ore producers in the world, said it would be bringing the world-class, complementary lithium business of Arcadium into its portfolio. Lithium is a metal widely used in electric vehicles and mobile devices.

The acquisition will help establish the Rio Tinto as a leader in "energy transition commodities," which would include aluminum, copper, as well as high-grade ore and lithium.

Arcadium's present annual lithium production capacity is at 75,000 tons lithium carbonate equivalent. There are already expansion plans that would double the capacity of the company by the end of 2028.

"Acquiring Arcadium Lithium is a significant step forward in Rio Tinto's long-term strategy, creating a world-class lithium business alongside our leading aluminum and copper operations to supply materials needed for the energy transition," said Rio Tinto Chief Executive Officer Jakob Stausholm.

He also underscored that it plans to realize the full potential of Arcadium's Tier 1 portfolio by bringing in their "scale, development and financial strength."

Stausholm also emphasized that they believe that combining both Rio and Arcadium's offerings will have a long-term value, which will be delivered to stakeholders.

The CEO of Arcadium, Paul Graves also expressed the same optimism, saying that they are confident that the "compelling cash offer" reflects the full and fair long-term value of their business.

"This agreement with Rio Tinto demonstrates the value in what we have built over many years at Arcadium Lithium and its predecessor companies, and we are excited that this transaction will give us the opportunity to accelerate and expand our strategy, for the benefit of our customers, our employees, and the communities in which we operate," he added.

The board of directors of both companies have unanimously approved the acquisition. The transaction is expected to close in mid-2025.

According to Reuters, the deal would now allow Rio to gain access to lithium mines, as well as processing facilities located in Argentina, Australia, Canada and the U.S. It will also be able to provide for the needs of automakers like Tesla, BMW and General Motors.