Rio Tinto: On the way to becoming one of the world's largest lithium producers

The Anglo-Australian mining giant Rio Tinto is on the fast track to securing a central position in the global lithium market. If the acquisition plans are realized, Rio Tinto would follow in the footsteps of current industry leaders Albemarle and SQM. However, a substantial price is anticipated: industry experts estimate the value of Arcadium to be between 4 to 6 billion US dollars, which represents a hefty premium of 60% over the current market value. Despite the steep premium, the price remains well below the company valuation of 10.6 billion US dollars in January. The merger of Alkem and Livent fueled this initially high valuation. However, a continuous decline in the lithium market led to a value correction of over 50%, making Arcadium an attractive takeover target. With a global presence in nine countries and clients such as Tesla, BMW, and General Motors, the company is broadly positioned. Michael Teran from Blackwattle Investment Partners describes the potential deal as an 'opportunistic offer' to benefit from the currently low lithium prices. Forward-looking investors hope that their long wait will prove rewarding and that they will benefit from cyclical market developments. Rio Tinto's existing lithium projects in Argentina and Serbia are already in the starting blocks. Significant investments, approximately 2 billion US dollars in Argentina, are expected to markedly increase production capacities in the coming years. However, the Serbian venture faces significant resistance, particularly regarding ecological impacts. Progress on this prestigious European project is thus jeopardized. Arcadium Lithium shares responded strongly to the takeover rumors, closing with a 45.7% increase on the Australian stock exchange, corresponding to a closing price of A$6.09. In the US, a pre-market increase of 30% was also recorded.