Rio Tinto is reportedly in discussions to acquire the lithium miner Arcadium, which could position Rio as the third-largest producer of lithium, essential for electric vehicle (EV) batteries. Arcadium’s shares surged 36% in extended trading on Friday amid the news.
The negotiations have been ongoing, particularly during the LME Week conference in London. While an offer is anticipated soon, the talks may not lead to a definitive agreement. Arcadium, based in Philadelphia, is estimated to be valued between $4 billion and $6 billion.
Acquiring Arcadium would enhance Rio’s portfolio, giving it access to lithium mines and processing facilities across four continents, crucial for meeting the rising demand for lithium-ion batteries in EVs and consumer electronics. Currently, Rio Tinto is a leading producer of copper and iron ore.
The recent decline in lithium prices, attributed to Chinese oversupply, has made Arcadium a more attractive target, with its shares falling over 50% since January. The deal could include a mix of cash and stock, and Arcadium has engaged two investment banks for the negotiations.
Rio Tinto’s acquisition of Arcadium would also provide a customer base that includes major companies like Tesla, BMW, and General Motors. Additionally, Arcadium’s expertise in direct lithium extraction (DLE) could benefit Rio, as this technology aims to efficiently extract lithium without traditional evaporation ponds.