Rio Tinto will buy US company Arcadium Lithium for $6.7bn (£5.1bn) in a huge bet on the energy transition, despite stagnant growth in the electric car market.
The deal will make the Anglo-Australian mining company one of the largest producers of battery metals, along with Albemarle and SQM.
Rio Tinto said it would pay $5.85 per share for Arcadium. That’s almost a 90% premium to the US-based lithium miner’s closing price of $3.08 on October 3, the day before news of a potential deal surfaced.
The acquisition gives Rio access to lithium mines, processing facilities and deposits in Argentina, Australia, Canada and the United States, all of which play a key role in the production of batteries for electric vehicles (EVs) and other applications. It is expected that. It would also give the world’s second-largest mining company a customer base that includes automakers Tesla, BMW and General Motors.
Rio is uncertain about the long-term future of the lithium market, even as China’s oversupply and slowing EV sales have depressed lithium metal prices, resulting in lithium miners emerging as attractive acquisition targets. I’m betting.
Automakers around the world have been complaining for months about slowing growth in EV demand. Japan’s Toyota last week announced that it would delay the start of EV production in the United States until 2026, after previously suggesting it would begin at the end of 2025. Ford and Volvo are among the companies that have postponed their electrification transitions.
In the UK, according to a survey by the lobby group Society of Motor Manufacturers and Traders (SMMT), the number of new EV registrations in September increased by only 3.7% compared to the same month last year, while the number of new diesel vehicle registrations increased by approximately 17.2 units. did. %.
Rio Tinto CEO Jakob Stausholm said of the bid to acquire Arcadium: “This is a countercyclical expansion in line with our disciplined capital allocation framework, increasing our exposure to high-growth and attractive markets at the appropriate point in the cycle.”
Arcadium chairman Peter Coleman said the cash offer would provide shareholders with “certainty and liquidity” and avoid risks associated with fluctuations in the lithium market.
Arcadium shares have fallen more than 37% since the beginning of the year, valuing the company at $4.56 billion.
Jason Beddoe, managing director of Australian fund manager Argo Investments, which owns Rio shares, said the deal made a lot of sense. “Certainly, this is a big premium, but the stock is heavily sold off,” he said.
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“Both companies are geographically close and both tap into Quebec hydropower,” said Bedaux, who visited both companies’ Canadian operations in recent weeks. It will be incorporated into.”
The transaction has been unanimously approved by both companies’ boards of directors and is expected to close in mid-2025.
Reuters contributed to this report.
