Rio Tinto signs deal to acquire leading lithium company Arcadium amid aluminium-lithium boom

Rio Tinto has reportedly signed a contract with Arcadium Lithium plc, agreeing to acquire the latter for US$5.85 per share in an all-cash transaction. This acquisition will bring Arcadium’s world-class lithium business into Rio Tinto’s portfolio, expanding it from aluminium, copper, and iron ore to lithium.

This acquisition, expected to close in mid-2025, will signify a groundbreaking collaboration between the aluminum and lithium industries. Lithium is an essential component used alongside aluminium for manufacturing aluminium-lithium (Al-Li) alloys used in aerospace technology and aeronautic applications because of its low density. Adding 1 per cent lithium by mass to aluminium reduces alloy’s density by 3 per cent and increases elastic modulus by 6 per cent. Lithium-aluminium is also used in lithium batteries as anodes and cathode prelithiation additives.

Rio Tinto has entered into this strategic agreement with immense confidence in the future growth of the lithium industry, projecting demand growth at a 10 per cent CAGR till 2040.

Arcadium is a leading name in the lithium manufacturing industry, with expertise in extraction processes, including hard-rock mining, conventional brine extraction, and direct lithium extraction. From the current lithium production capacity of 75,000 tonnes, including lithium hydroxide and lithium carbonate, the company eyes to expand it to more than double by the end of 2028.

Arcadium is a transcontinental company with facilities and projects in Argentina, Australia, Canada, China, Japan, the United Kingdom, and the United States, supported by 2,400 employees.

On the acquisition, Rio Tinto’s Chief Executive Officer Jakob Stausholm said, “Acquiring Arcadium Lithium is a significant step forward in Rio Tinto’s long-term strategy, creating a world-class lithium business alongside our leading aluminium and copper operations to supply materials needed for the energy transition. Arcadium Lithium is an outstanding business today and we will bring our scale, development capabilities and financial strength to realise the full potential of its Tier 1 portfolio. 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.”

He added, “We look forward to building on Arcadium Lithium’s contributions to the countries and communities where it operates, drawing on the strong presence we already have in these regions. Our team has deep conviction in the long-term value that combining our offerings will deliver to all stakeholders.”

Arcadium Lithium’s CEO Paul Graves said: “We are confident that this is a compelling cash offer that reflects a full and fair long-term value for our business and de-risks our shareholders’ exposure to the execution of our development portfolio and market volatility. Arcadium Lithium is a leading global lithium producer with the widest offering of lithium chemical products and a world-class manufacturing network, backed by a broad technology portfolio and expertise in all aspects of the lithium value chain. This agreement with Rio Tinto demonstrates the value in what we have built over many years at Arcadium Lithium and its predecessor companies, and we are excited that this transaction will give us the opportunity to accelerate and expand our strategy, for the benefit of our customers, our employees, and the communities in which we operate.”