Rio Tinto (ASX:RIO) wants to acquire the US-Australian-Argentinian lithium group Arcadium in a deal that could ignite consolidation across the struggling industry.
Media reports indicate that Rio has been in talks to buy the lithium miner Arcadium, a move that would make Rio the third-largest producer of the electric vehicle battery metal.
The price is suggested to be around $4 billion to $6 billion, according to a detailed report by Reuters over the weekend.
Arcadium shares jumped 2.7% in after-hours trading offshore early Saturday, Sydney time, as the news broke. This was after the shares had edged up to just over A$4 on the ASX.
However, in UK after-hours trading, the shares surged 16% to 218p. London is the key market—not the ASX—because Arcadium is a UK-registered company, despite being based in the US.
Arcadium was formed earlier this year after the merger of Livent of the US and Allkem, which itself was created from the merger of Galaxy Resources and Orocobre.
Reports on Sunday claimed that at least one Australian shareholder had written to the board opposing a bid at the current price, seeking an offer around A$8 billion, which was the value at the start of 2024.
Reuters reported that talks have been ongoing and continued in London last week during the LME Week conference.
An early rumor suggested that the US group Albemarle was a leading candidate for Rio’s attention, which sent Albemarle shares up more than 8% on Friday on Wall Street.
If Rio successfully acquires Arcadium, it would become the third-largest producer of lithium ores and raw materials globally, ranking only behind Albemarle of the US and SQM of Chile.
Both Albemarle and SQM have significant assets in Australia, Chile, and China.
Although acquiring Arcadium would provide Rio with access to lithium mines, processing facilities, and deposits across four continents to fuel decades of growth—along with a customer base that includes Tesla, BMW, and General Motors—its presence in Australia will be modest.
Arcadium is planning to put its WA mine at Mount Cattlin on care and maintenance, with the objective of closing it in early 2025 if lithium prices do not improve.
If Rio bids, it will face difficult choices regarding its two main prospects: the Jadar area in Serbia, which is still stalled and facing strong opposition from local residents, despite government support for its development.
Jadar also contains borates in addition to lithium. Recently, Rio was reinstated its license for Jadar by the Serbian government in an effort to expedite development.
Rio also has the Rincon brine-based project in Argentina, where a trial processing operation has been established.
An attractive aspect for Rio is that Arcadium, thanks to the Livent business, possesses considerable expertise in direct lithium extraction (DLE), a growing segment of the lithium industry that aims to mechanically filter the metal from brines.
