Rio Tinto to Acquire Arcadium Lithium for $6.7 Billion

Rio Tinto, a British-Australian multinational company and world’s second largest metals and mining corporation, and the US-based Arcadium Lithium on Wednesday announced an agreement under which Rio Tinto will acquire Arcadium in an all-cash transaction for $6.7 billion.

The transaction represents a premium of 90% to Arcadium’s closing price of $3.08 per share on 4 October 2024, a premium of 39% to Arcadium’s volume-weighted average price (VWAP) since Arcadium was created on 4 January 2024, and values Arcadium’s diluted share capital at around $6.7 billion.

The transaction will bring Arcadium’s world-class, complementary lithium business into Rio Tinto’s portfolio, establishing a global leader in energy transition commodities – from aluminium and copper to high-grade iron ore and lithium.

The Transaction has been unanimously approved by both the Rio Tinto and Arcadium Lithium Boards of Directors, which will be implemented by way of a Jersey scheme of arrangement, is expected to close in mid-2025.

Rio Tinto BM Subsidiary Limited, an indirect wholly owned subsidiary of Rio Tinto plc, will acquire the Arcadium Lithium shares pursuant to the Transaction Agreement.

Arcadium is a global, fast-growing, vertically integrated lithium chemicals producer with an asset base of long-life, low-cost operations and growth projects. It has leading capabilities in lithium chemicals manufacturing and extraction processes, including hard-rock mining, conventional brine extraction and direct lithium extraction.

The company’s current annual lithium production capacity across a range of products including lithium hydroxide and lithium carbonate is 75,000 tonnes lithium carbonate equivalent, with expansion plans in place to more than double capacity by the end of 2028.

Major Step Forward

Rio Tinto CEO Jakob Stausholm said that acquiring Arcadium Lithium is a significant step forward in Rio Tinto’s long-term strategy, creating a world-class lithium business alongside its leading aluminium and copper operations to supply materials needed for the energy transition.

“We look forward to building on Arcadium Lithium’s contributions to the countries and communities where it operates, drawing on the strong presence we already have in these regions. Our team has deep conviction in the long-term value that combining our offerings will deliver to all stakeholders,” Jakob said.

Arcadium Lithium CEO Paul Graves said that they were confident that this is a compelling cash offer that reflects a full and fair long-term value for their business and de-risks their shareholders’ exposure to the execution of our development portfolio and market volatility.

“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,” Paul said.

Right timing. Rio Tinto is confident in the long-term outlook for lithium, with more than 10% compound annual growth rate (CAGR) in lithium demand expected through to 2040 leading to a supply deficit.

With spot lithium prices down more than 80% versus peak prices, this counter-cyclical acquisition comes at a time with substantial long-term market and portfolio upside, underpinned by an appealing market structure and established jurisdictions.