The Rio Tinto Ltd. sales space on the opening day of the Investing in African Mining Indaba in Cape City, South Africa, on Monday, Feb. 6, 2023.
Dwayne Senior | Bloomberg | Getty Photographs
The world’s second-largest miner Rio Tinto stated Wednesday it’s going to purchase U.S. lithium producer Arcadium for $6.7 billion.
Rio Tinto stated the deal can be an all-cash transaction for $5.85 per share, representing a premium of 90% to Arcadium’s Oct. 4 closing value of $3.08 per share.
Arcadium Lithium’s market worth presently stands at $4.56 billion, in line with LSEG information, with shares rallying 37% thus far this week. Rio Tinto’s London-listed shares have fallen 4.7% thus far this week.
Information of the transaction confirms an announcement earlier this week that the 2 corporations have been in talks. If the deal goes by way of, Rio Tinto will grow to be one of many largest suppliers of lithium, trailing solely after Albemarle and SQM.
Rio Tinto CEO Jakob Stausholm stated the acquisition is a “important step ahead in Rio Tinto’s long-term technique, making a world-class lithium enterprise alongside our main aluminium and copper operations to provide supplies wanted for the vitality transition.”
Arcadium Lithium CEO Paul Graves stated his agency was “assured that it is a compelling money supply that displays a full and truthful long-term worth for our enterprise and de-risks our shareholders’ publicity to the execution of our growth portfolio and market volatility.”
The transfer comes as mining corporations search to safe important minerals for the worldwide vitality transition. Lithium costs have been beneath strain because of Chinese language oversupply. Costs of the benchmark 99.2% lithium carbonate have fallen over 20% year-to-date to $10,800 per metric ton, FactSet information exhibits.
Graves added that the deal would give the corporate “the chance to speed up and broaden our technique, for the good thing about our prospects, our staff, and the communities by which we function.”
In the identical sector in Might, a mega merger broke down after BHP Group stated it will not be making a agency supply for Anglo American, after the latter rejected a request to increase takeover talks. The bumper takeover proposal was a part of an effort to create a copper mining juggernaut and to capitalize on the bottom steel’s important position within the inexperienced vitality transition.
—CNBC’s Karen Gilchrist contributed to this text.
Correction: This story has been up to date with the proper present market worth for Arcadium Lithium on the time of publication.
