The transfer would place Rio Tinto as one of many world’s largest lithium miners, behind solely US-based Albemarle (NYSE: ALB) and Chile’s SQM (NYSE: SQM).
The acquisition would hand Rio lithium mines in Argentina and Australia, in addition to processing amenities within the US, China, Japan and the UK. Its buyer base would come with main names, corresponding to Tesla, BMW and Normal Motors.
Arcadium was created in January from the merger of Philadelphia-based Livent and Australia’s Allkem. Its shares have fallen since, dragged by declining lithium costs, which in flip is a results of weaker demand from electrical car (EV) makers and Chinese language oversupply.
BMO Capital Markets analyst, Joel Jackson, forward of the affirmation of the deal famous a possible takeover has been a part of market rumours for years. “Many traders imagine that Arcadium (i.e., the Allkem/Livent merger) was accomplished to shake out curiosity from suitors like Rio,” he wrote.
The transaction worth is forward of market expectations which was pegged within the $4 billion to $6 billion vary. “In our view, this determine would worth Arcadium extra like a mining firm than a specialty chemical compounds agency, assuming a mid-cycle value vary of $18,000–$19,000 per tonne of lithium carbonate equal (LCE), common promoting value (ASP),” famous Jackson
Earlier than the official announcement trade contributors have been supportive of the deal. Vulcan Power’s (ASX: VUL) founder and govt chair, Francis Wedin, stated the corporate views the event as a beneficial one for the broader lithium market, significantly as a result of it shines a highlight on Adsorption-type DLE (A-DLE) manufacturing, utilized by Arcadium since 1996 subsequent door to Rio’s personal A-DLE venture in Rincon.
“The truth that Rio is becoming a member of Exxon and Equinor by specializing in A-DLE is an additional indication of how the third wave of lithium’s progress is growing,” he stated in an emailed assertion.
Battery ambitions
Over the previous six years, Rio has been increasing its footprint in the battery market. In 2018, it reportedly tried to purchase a $5bn stake in Chile’s SQM, the world’s second largest lithium producer.
In April 2021, the world’s second largest miner kicked off lithium manufacturing from waste rock at a demonstration plant positioned at a borates mine it controls in California.
Rio took one other key step into the lithium market in 2022, finishing the acquisition of the Rincon lithium venture in Argentina, which has reserves of just about two million tonnes of contained lithium carbonate equal, adequate for a 40-year mine life.
The corporate plans to develop a battery-grade lithium carbonate plant at Rincon with an annual capability of three,000 tonnes and has earmarked $350 million to put money into the venture, with first manufacturing anticipated later this yr.
It’s also making an attempt to revive one in all its largest lithium initiatives, the proposed $2.4 billion Jadar mine in Serbia. Rio had its mining licence revoked in 2022, following widespread protests towards the proposed mine on environmental considerations.
The mining large gained a small, however key battle in July, as Serbia reinstated Rio Tinto’s licence to develop it, however the firm should safe approvals to maneuver in the direction of manufacturing on the web site. On Monday, nonetheless, the nation’s parliament started debating a proposal to ban lithium and borate mining and exploration. If handed right into a regulation, this might successfully put an finish to the contested Jadar venture.
With projected manufacturing of 58,000 tonnes of refined battery-grade lithium carbonate per yr, Jadar s anticipated to be Europe’s largest lithium mine.
The operation may provide sufficient lithium to energy a million electrical automobiles and meet 90% of Europe’s present lithium wants.
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