Mining giant Rio Tinto (ASX:RIO) has announced an agreement to acquire Arcadium Lithium, a US-based lithium chemicals producer, in a $6.7 billion all-cash deal. The acquisition, revealed on October 9, 2024, will strengthen Rio Tinto's position as one of the world's largest lithium producers, essential for the rapidly growing electric vehicle (EV) market and the broader energy transition. Rio Tinto will pay $5.85 per Arcadium share, a 90% premium over Arcadium’s October 4 closing price.
Arcadium, formed earlier in 2024 through a merger of Livent and Allkem, currently has a production capacity of 75,000 tonnes of lithium carbonate equivalent, with plans to more than double that by 2028. The deal will provide Rio Tinto with lithium assets in Argentina and Australia, along with processing facilities in several key markets, including the US, China, and Japan.
This acquisition allows Rio Tinto to tap into a growing lithium market, as demand is expected to rise by 10% annually through 2040, despite recent dips in lithium prices. The deal is expected to close in mid-2025, pending regulatory approvals and shareholder consent.
