Rio Tinto Group is acquiring US-based Arcadium Lithium in a $6.7 billion all-cash deal, which positions Rio Tinto as a key player in the lithium production sector as it aims for leadership in the broader market for energy transition commodities. The acquisition will be conducted through Rio Tinto BM Subsidiary and is structured as a Jersey scheme of arrangement that places a value of $5.85 per share on Arcadium's stock, representing a significant 90% premium over Arcadium's closing price of $3.08 per share as of October 4. The transaction is expected to finalize by mid-2025, contingent on the approval from Arcadium shareholders, regulatory bodies, and the Royal Court of Jersey.
This merger is projected to establish the world's largest lithium resource base, combining Arcadium's operational facilities and projects across multiple countries, including Argentina, Australia, Canada, China, Japan, the UK, and the United States. Presently, Arcadium has a production rate of 75,000 tonnes of lithium carbonate equivalent each year and has outlined plans to more than double this output by the end of 2028. Leveraging Arcadium's assets, Rio Tinto is dedicated to creating "world-class lithium hubs" in Argentina and Quebec, Canada.
The integration of operations from both regions is expected to enable Rio Tinto to establish leadership in lithium processing. Despite current spot lithium prices remaining over 80% lower than their previously reached peak, the London-listed mining company is optimistic regarding the long-term demand outlook for lithium, especially given the anticipated increase in consumption as the global energy transition progresses. Rio Tinto's Chief Executive Officer, Jakob Stausholm, remarked, "Acquiring Arcadium Lithium is a significant step forward in Rio Tinto's long-term strategy, creating a world-class lithium business alongside our leading aluminum and copper operations to supply materials needed for the energy transition.
This is a counter-cyclical expansion aligned with our disciplined capital allocation framework, increasing our exposure to a high-growth, attractive market at the right point in the cycle." Meanwhile, Rio Tinto's stock experienced a slight decrease during morning trading, with a current price of $5019.00, reflecting a change of $-25 and a percent change of -0.50%..