Rio Tinto buys Arcadium Lithium for $6.7bn

Rio Tinto has paid $6.7 billion to take over the New York-listed lithium miner Arcadium Lithium.
The deal catapults the world’s second largest miner into the ranks of the top producers of the metal, which is used in electric vehicle batteries and power storage.
Rio is paying $5.85 a share in cash, a 90 per cent premium to Arcadium’s closing price of $3.08 per share on October 4 before the companies revealed they were in takeover talks. Arcadium share closed at $4.24 last night. Rio shares dipped 30p, or 0.6 per cent, to £50.14 in early trading in London.
Jakob Stausholm, chief executive 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.”
Buying Arcadium gives Rio access to lithium mines, processing facilities and deposits in Argentina, Australia, Canada and the United States, and to a customer base that includes Tesla, BMW and General Motors. Arcadium has 2,400 employees.
The combined group is expected to account for about 10 per cent of global lithium chemicals supply by 2030, analysts at Canaccord said.
A sharp drop in lithium prices, due in part to oversupply by China and falling demand for new electric vehicles, had resulted in a 39 per cent fall in Arcadium shares since the start of the year. This had left the company vulnerable to a takeover.
Lithium demand, however, is forecast to grow sharply on the back of growth in the use of lithium-ion batteries.
Rio has two lithium projects, Rincon in Argentina and Jadar in Serbia, but neither has a date for production to start. Jadar has been beset by delays amid environmental protests. Annual output for both mines is expected to be about 58,000 tonnes a year.
Arcadium produced 20,100 tonnes of lithium hydroxide and carbonate during the first six months of the year and 53,500 tonnes of spodumene concentrate, a key source of lithium.
Paul Graves, Arcadium Lithium’s chief executive, said: “We are confident that this is a compelling cash offer that reflects a full and fair long-term value for our business and de-risks our shareholders’ exposure to the execution of our development portfolio and market volatility.”
Several miners have been looking for deals to secure the metals needed for the transition to low-carbon energy sources. In May, BHP made a failed £39 billion bid for Anglo American in an attempt to gain access to copper, which is used in green technologies including electric vehicles, wind turbines and energy networks.