RIO TINTO is acquiring US company Arcadium Lithium for US$6.7bn, bolstering the mining giant’s end-to-end lithium offering.
Arcadium specialises in several stages of lithium production, including hard-rock mining, and lithium extraction, producing 75,000 t/y of lithium products.
Rio Tinto anticipates the deal will “complement” its already burgeoning lithium business, and further its ambition to be a global leader in energy transition commodities.
Lithium is one of the major metals used for electric vehicle batteries, with battery demand for lithium amounting to around 140 kt last year, 85% of total lithium demand.
Through the acquisition, Rio Tinto will have access to Arcadium’s range of extraction technologies, including its direct lithium extraction (DLE) method.
The method can concentrate lithium brine for downstream lithium production without the need for conventional evaporation ponds.
Needing less land, DLE has a smaller carbon footprint than traditional brine extraction. Energy data provider Wood Mackenzie estimates that lithium recoveries using DLE could increase to around 70–90%, a 30% improvement on evaporation ponds.
Jakob Stausholm, CEO of Rio Tinto, said: “Acquiring Arcadium Lithium is a significant step forward in Rio Tinto’s long-term strategy, creating a world-class lithium business alongside our leading aluminium and copper operations to supply materials needed for the energy transition.”
Arcadium has experienced a decline in product sales over the last few quarters, with earnings before interest, taxes, depreciation, and amortisation (EBITDA) for Q2 2024 sitting at US$99.1m, down from US$108.8m the previous quarter.
The decrease has been attributed to the volatile lithium market, which has experienced “depressed” pricing, falling from US$80,000 p/t in 2022 to US$13,000 in 2024.
Prices are not expected to rebound until at least 2028 thanks to oversupply from China – the world’s largest lithium producer – according to a Clean Energy Associates forecast report.
Peter Coleman, chairman of Arcadium, said: “We are facing challenging market conditions with the outlook for lithium prices continuing to remain depressed.
“The immediate and substantial cash offer provides shareholders with certainty and liquidity, allowing shareholders to realise the full value of our investment without the ongoing risks associated with potential future market fluctuations.”
Arcadium is currently progressing with its plan to more than double its lithium capacity by the end of 2028.
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