Rio Tinto mulls bid for Arcadium Lithium

Rio Tinto has confirmed it is mulling a bid for Arcadium Lithium, a New York-listed producer of the metal essential for electric vehicle batteries and power storage.
A successful deal would catapult the FTSE 100 miner into the ranks of the world’s top lithium producers.
Rio said it had made an approach to Arcadium Lithium regarding a potential acquisition, adding: “The approach is non-binding and there is no certainty that any transaction will be agreed to or will proceed.”
Buying Arcadium would give the world’s second-biggest miner access to lithium mines, processing facilities and deposits in Argentina, Australia, Canada and the United States, and to a customer base that includes Tesla, BMW, and General Motors.
A sharp drop in lithium prices, due in part to oversupply by China and falling demand for new electric vehicles, has resulted in a 54 per cent in Arcadium shares since the start of the year, which increased speculation that the company was vulnerable to a takeover. Lithium demand is forecast to surge, however, on the back of growth in the use of lithium-ion batteries.
Jakob Stausholm, Rio’s chief executive, said at the company’s first-half results in July that lithium assets were more attractive after a fall in the price.
Reuters reported last week that the companies had been holding talks about a deal that could value Arcadium at “$4 billion to $6 billion or higher”.Several miners have been looking for deals to secure the metals needed for the transition to low-carbon energy sources. In May, BHP made a failed £39 billion bid for Anglo American in an attempt to gain access to copper, which is used in green technologies including electric vehicles, wind turbines and energy networks.
Anglo American is regarded as a key producer of the metal because of its copper mines in Peru and Chile, which are capable of producing about 760,000 tonnes of copper annually. Its capability to expand its copper operations has added to its attraction.
The Australian shares of Arcadium rallied as much as 50 per cent to A$6.29, sparking a jump in other Australian-listed lithium companies. In New York, Arcadium shares closed at $3 on Friday, up 10 per cent, valuing the company at $3.3 billion.
Rio Tinto’s Australian shares eased 0.2 per cent to A$121.17.