Rio Tinto’s ‘bite-sized’ Arcadium acquisition makes sense – CreditSights
Diversified major Rio Tinto’s move to acquire Arcadium Lithium in an all-cash transaction of $8.85 a share makes strategic sense, allowing the major to quickly increase exposure to the key energy transition material.
This is according to analysts at CreditSights, who state that through Arcadium Rio Tinto will grow its exposure to lithium without the undue risk of undertaking greenfield projects in high-risk jurisdictions.
“Arcadium is a bite-sized acquisition for a company of Rio Tinto’s scale,” analysts Wen Li, Michael O’Brien and Shreyas Namppthiri note.
Rio Tinto plans to fund the $6.7-billion deal, formally announced on Wednesday, through its existing cash reserves and available credit facilities.
The transaction represents Rio Tinto’s biggest deal since 2007 and marks a significant expansion in its lithium business.
Rio Tinto CEO Jacob Stausholm has stressed the counter-cyclical nature of the transaction, as it comes at a time when the lithium market is experiencing an oversupply and declining prices.
Lithium carbonate prices in China are down more than 85% from their peak in 2022.
In a conference call, Stausholm has said that Rio Tinto believes the market will be under-supplied by the end of the decade, particularly if prices remain in a slump.
Paul Graves, Arcadium CEO, has noted that it is difficult to bring low-cost resources on line from scratch. With Arcadium in its portfolio, Rio Tinto will have the advantage of low-cost lithium production. “We feel very confident there is plenty of scope for more rapid and larger expansion of a low-cost resource like ours,” he says.
The transaction is subject to approval by Arcadium's shareholders and regulatory authorities and is expected to close by mid-2025.
Comments
Research Reports
Projects
Latest Multimedia
Latest News
Showroom
SmartMine IoT has been developed with the mining industry in mind, to provides our customers with powerful business intelligence and data modelling...
VISIT SHOWROOM
Weir Minerals Europe, Middle East and Africa is a global supplier of excellent minerals solutions, including pumps, valves, hydrocyclones,...
VISIT SHOWROOM
Press Office
Announcements
What's On
Subscribe to improve your user experience...
Option 1 (equivalent of R125 a month):
Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format
Option 2 (equivalent of R375 a month):
All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors
including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.
Already a subscriber?
Forgotten your password?
Receive weekly copy of Creamer Media's Engineering News & Mining Weekly magazine (print copy for those in South Africa and e-magazine for those outside of South Africa)
➕
Recieve daily email newsletters
➕
Access to full search results
➕
Access archive of magazine back copies
➕
Access to Projects in Progress
➕
Access to ONE Research Report of your choice in PDF format
RESEARCH CHANNEL AFRICA
R4500 (equivalent of R375 a month)
SUBSCRIBEAll benefits from Option 1
➕
Access to Creamer Media's Research Channel Africa for ALL Research Reports on various industrial and mining sectors, in PDF format, including on:
Electricity
➕
Water
➕
Energy Transition
➕
Hydrogen
➕
Roads, Rail and Ports
➕
Coal
➕
Gold
➕
Platinum
➕
Battery Metals
➕
etc.
Receive all benefits from Option 1 or Option 2 delivered to numerous people at your company
➕
Multiple User names and Passwords for simultaneous log-ins
➕
Intranet integration access to all in your organisation
