Rio Tinto wants to take over lithium producer Arcadium
Both companies announced today, Monday, that Rio Tinto had submitted a purchase offer. Although the financial details are unknown, Arcadium’s major shareholder Blackwattle Investment Partners described the move as ‘opportunistic’ and said an offer of between four and six billion dollars would ‘significantly undervalue’ the company.
The purchase offer is therefore likely to be at this level – and Blackwattle’s dissatisfaction is due to the fact that Arcadium’s share price has fallen by over 50 per cent since the beginning of the year. This has now made Arcadium an attractive takeover target for Rio Tinto. The reason for the fall in the share price was in turn the fact that lithium prices had recently fallen significantly due to the Chinese oversupply.
The purchase offer comes against the backdrop that lithium is one of the most important raw materials for the drive revolution: many electric car batteries use lithium. However, the British-Australian company Rio Tinto has hardly played a role in the lithium business to date, has only participated in a lithium project in Argentina and is planning to open Europe’s largest lithium mine in Serbia soon, despite numerous objections from local residents. To date, Rio Tinto has mainly mined iron ore, aluminium and copper.
The purchase of Arcadium would give Rio Tinto access to lithium mines, processing plants and deposits on four continents. Rio Tinto would also gain access to a customer base for lithium that includes car manufacturers BMW, Ford, GM, Tesla and Toyota as well as battery manufacturers and suppliers such as BTR, Lyten, Panasonic Energy and SES.
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