Rio Tinto, a global mining giant, has reportedly engaged in preliminary talks to acquire Arcadium Lithium Plc. Arcadium confirms these discussions are informal, and it remains uncertain whether a deal will occur. Despite this, Arcadium continues to focus on its strategic growth objectives.
Should this acquisition proceed, Rio Tinto would become one of the world's largest lithium suppliers, closely following U.S. producer Albemarle and Chile's SQM. Arcadium is a vertically integrated lithium producer, formed from the merger of Australia's Allkem and the U.S.'s Livent earlier this year. The company employs around 2,400 individuals across nine countries, with 84% of its revenue derived from Asia's lithium demand.
As global energy shifts drive demand for critical minerals, lithium has become highly coveted, primarily for use in electric vehicles, electronics, and storage systems. However, a slowdown in EV sales has led to an oversupply in the lithium market. Arcadium's stock has plummeted over 80% this year on the NYSE, making it an attractive acquisition target.
Rio Tinto seeks to optimize its asset portfolio in response to changing market demands. Acquiring Arcadium would grant Rio Tinto access to lithium mines and facilities across four continents, expanding its customer base, including Tesla, BMW, and General Motors. The company previously demonstrated its commitment to battery materials by purchasing Argentina's Rincon lithium project in 2021 for $825 million.
Moreover, Rio Tinto is advancing its Rincon lithium brine project, with plans to develop a battery-grade lithium carbonate production facility by mid-2024. The current surge in mining industry deals is largely driven by the need for key minerals amidst the global energy transition.
Additionally, Green Lithium, a UK-based lithium refinery developer, announced a memorandum of understanding with Rio Tinto to establish a lithium supply chain partnership in Britain and the EU. Green Lithium's CEO highlights the importance of this collaboration in supporting the low-carbon supply of battery-grade lithium, crucial for the EV and sustainable energy sectors.
