Posted by Paul Moore on ninth October 2024
Rio Tinto and Arcadium Lithium PLC have introduced a definitive settlement beneath which Rio Tinto will purchase Arcadium in an all-cash transaction for US$5.85 per share which values Arcadium’s diluted share capital at roughly $6.7 billion. The Transaction the assertion stated “will carry Arcadium’s world-class, complementary lithium enterprise into Rio Tinto’s portfolio, establishing a world chief in vitality transition commodities – from aluminium and copper to high-grade iron ore and lithium.”
Arcadium is described as a world, fast-growing, vertically built-in lithium chemical compounds producer with an asset base of long-life, low-cost operations and development tasks. It has main capabilities in lithium chemical compounds manufacturing and extraction processes, together with hard-rock mining, typical brine extraction and direct lithium extraction.
Arcadium’s present annual lithium manufacturing capability throughout a variety of merchandise together with lithium hydroxide and lithium carbonate is 75,000 t lithium carbonate equal, with growth plans in place to greater than double capability by the tip of 2028. Arcadium’s international operations, comprising roughly 2,400 staff, embrace services and tasks in Argentina, Australia, Canada, China, Japan, the UK and the USA.
Rio Tinto Chief Govt Officer Jakob Stausholm stated: “Buying Arcadium Lithium is a major step ahead in Rio Tinto’s long-term technique, making a world-class lithium enterprise alongside our main aluminium and copper operations to produce supplies wanted for the vitality transition. Arcadium Lithium is an impressive enterprise at present and we’ll carry our scale, improvement capabilities and monetary power to understand the total potential of its Tier 1 portfolio. It is a counter-cyclical growth aligned with our disciplined capital allocation framework, rising our publicity to a high-growth, enticing market on the proper level within the cycle.”
He provides: “We sit up for constructing on Arcadium Lithium’s contributions to the international locations and communities the place it operates, drawing on the sturdy presence we have already got in these areas. Our group has deep conviction within the long-term worth that combining our choices will ship to all stakeholders.”
Arcadium Lithium CEO Paul Graves stated: “We’re assured that this can be a compelling money provide that displays a full and truthful long-term worth for our enterprise and de-risks our shareholders’ publicity to the execution of our improvement portfolio and market volatility. Arcadium Lithium is a number one international lithium producer with the widest providing of lithium chemical merchandise and a world-class manufacturing community, backed by a broad expertise portfolio and experience in all elements of the lithium worth chain. This settlement with Rio Tinto demonstrates the worth in what now we have constructed over a few years at Arcadium Lithium and its predecessor firms, and we’re excited that this transaction will give us the chance to speed up and broaden our technique, for the advantage of our clients, our staff, and the communities during which we function.”
The transaction Rio Tinto stated will carry its scale, improvement capabilities and monetary power to understand the total potential of the Arcadium portfolio.
Rio Tinto stated Arcadium is likely one of the world’s main international lithium platforms, with diversified manufacturing and processing capabilities, “a broad vary of high-performance lithium merchandise, a extremely enticing suite of development tasks, and long-term blue-chip buyer relationships.”
Its Tier 1 belongings have maintained excessive margins through-the-cycle, and its useful resource base is anticipated to assist ~130% capability development by 2028 inside Rio Tinto’s present geographies. Rio Tinto’s and Arcadium’s mixed belongings will characterize the world’s largest lithium useful resource base and make Rio Tinto one of many main lithium producers globally on a pro-forma foundation.
Rio Tinto provides that it has the steadiness sheet power and confirmed challenge supply functionality to execute and, over time, speed up the total potential from Arcadium’s Tier 1 useful resource base. “Rio Tinto and Arcadium have complementary footprints and deep expertise in Argentina and Quebec, the place Rio Tinto expects to determine world-class lithium hubs with clear alternatives for sharing skillsets and lowering prices. Combining Rio Tinto and Arcadium’s technological management in lithium extraction, the transaction will place Rio Tinto to turn into a market chief in lithium processing. Rio Tinto seems to be ahead to constructing on Arcadium’s historical past of business excellence that features multi-year relationships with main OEMs and battery firms, by making certain dependable, low-cost and sustainable provide.”
Rio Tinto closed by saying it’s assured within the long-term outlook for lithium, with greater than 10% compound annual development price in lithium demand anticipated by means of to 2040 resulting in a provide deficit. With spot lithium costs down greater than 80% versus peak costs, this counter-cyclical acquisition comes at a time with substantial long-term market and portfolio upside, underpinned by an interesting market construction and established jurisdictions.
