Rio Tinto’s proposed $US6.7 billion ($10.75 billion) acquisition of Arcadium Lithium is now expected to be completed on March 6, with the transaction subject to approval by the Royal Court of Jersey and other customary closing conditions.
First announced in October 2024, the transaction will see Rio acquire Arcadium in an all-cash transaction for $US5.85 per share, representing a 90 per cent premium on Arcadium’s October 4 2024 closing price of $US3.08 per share.
The deal had synchronicities that elicited the transaction. Both companies operate in similar jurisdictions, including Argentina where Rio Tinto is developing its Rincon lithium project – which received approval for a $2.5 billion expansion in December – and Arcadium is operating its Salar Del Hombre Muerto, Olaroz, Sal de Vida and Cauchari lithium assets.
Rio will also be able to leverage Arcadium’s multinational upstream lithium capabilities and downstream processing offerings.
The deal has received all required pre-closing regulatory approvals, including merger control clearance being satisfied or waived in Australia, Canada, China, Japan, South Korea, the UK and the US, with investment screening approval having been satisfied in Australia, Canada, Italy, the UK and the US.
If successful, the acquisition would position Rio as the world’s third largest lithium supplier, only behind Albemarle and Sociedad Química y Minera de Chile S.A. (SQM).
“We believe the pending combination with Rio Tinto will give us the ability to accelerate and expand this growth opportunity for the benefit of our customers, our employees, and the communities in which we operate,” Arcadium president and chief executive officer Paul Graves said.
Arcadium has also reported mixed production results for 2024, primarily triggered by faltering prices caused by a supply surplus and an increase in lithium supplies from countries such as China.
The company delivered $US1 billion in revenue for the full year, with lithium hydroxide and lithium carbonate producing $US728.9 million and spodumene concentrate $US109.7 million respectively.
Arcadium’s adjusted earnings before interest, taxes, depreciation, and amortisation (EBITDA) for 2024 equalled $US324.5 million and adjusted earnings per share were 14 US cents per diluted share.
“(The year of) 2024 was highlighted by a focus on executing key initiatives within our control while navigating challenging broader market conditions,” Graves said.
“This included exercising cost and operational discipline while maintaining the flexibility to adapt to a quickly changing market environment. Our strong customer relationships and commercial strategy of securing long term contracts helped us to achieve higher realized pricing during the year than we would have under a fully market-based pricing approach.”
Arcadium’s total full year volumes sold during 2024 were slightly lower on a lithium carbonate equivalents basis, with higher combined lithium carbonate and hydroxide sales offset by lower spodumene concentrate sales due to reduced production at the Mt Cattlin operation in Western Australia.
Graves said “to deliver significant growth over the coming years”, the company will leverage the size and quality of its portfolio of assets and expansion projects.
Arcadium expects 25 per cent higher combined lithium carbonate and lithium hydroxide volumes in 2024 and 2025 from expansion projects at Fénix and Olaroz in Argentina that have already been completed.
The company will also execute two waves of expansions across its large, high-quality and low-cost assets in Argentina and Canada.
The first wave of four existing projects at various stages of advancement is expected to be fully completed, in stages, by 2028 and more than double sales volumes from today.
The second wave of projects are at the development and planning stage and offers the company the opportunity to increase production capacity.
Subscribe to Australian Mining and receive the latest news on product announcements, industry developments, commodities and more.
