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 Pictures
The world’s second-largest miner Rio Tinto stated Wednesday it should purchase U.S. lithium producer Arcadium for $6.7 billion.
Rio Tinto stated the deal could be an all-cash transaction for $5.85 per share, representing a premium of 90% to Arcadium’s Oct. 4 closing worth of $3.08 per share.
Arcadium Lithium’s market worth at present stands at $4.56 billion, in response to 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 firms had 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 “vital step ahead in Rio Tinto’s long-term technique, making a world-class lithium enterprise alongside our main aluminium and copper operations to produce supplies wanted for the power transition.”
Arcadium Lithium CEO Paul Graves stated his agency was “assured that it is a compelling money provide that displays a full and honest 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 firms search to safe important minerals for the worldwide power transition. Lithium costs have been below strain on account 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 reveals.
Graves added that the deal would give the corporate “the chance to speed up and increase our technique, for the good thing about our clients, 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 might not be making a agency provide 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 metallic’s important position within the inexperienced power 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.