Rio Tinto Acquires Arcadium Lithium for $6.7 Billion in Counter-Cyclical Lithium Bet
Arcadium Lithium operates lithium brine and hard-rock assets across Argentina, Australia, Canada, and other jurisdictions. Rio Tinto will use its project development capabilities to accelerate Arcadium’s growth pipeline.
Key Points
- Rio Tinto agreed to acquire Arcadium Lithium (NYSE: ALTM) for $5.85 per share in cash, valuing the company at approximately $6.7 billion in total, inclusive of outstanding debt.
- The offer represents a 90% premium to Arcadium’s closing price on October 4, 2024, and a 39% premium to its volume-weighted average price since the company was formed on January 4, 2024.
- Arcadium brings 75,000 tonnes of current annual lithium carbonate equivalent capacity, with expansion plans targeting approximately 130% capacity growth by 2028.
- Rio Tinto framed the acquisition as counter-cyclical, with spot lithium prices more than 80% below their peak — a deliberate entry point for a commodity where demand is expected to grow at more than 10% compounded annually through 2040.
- The transaction is expected to close in mid-2025, subject to Arcadium shareholder approval and customary regulatory conditions.
Deal Overview
Rio Tinto and Arcadium Lithium plc announced on October 9, 2024 that they have entered into a definitive transaction agreement under which Rio Tinto will acquire Arcadium in an all-cash transaction at $5.85 per share1. The deal values Arcadium’s diluted share capital at approximately $6.7 billion, including conversion of all outstanding convertible senior notes due 2025.
The transaction was unanimously approved by both companies’ boards of directors. It will be implemented by way of a Jersey scheme of arrangement, requiring approval from a majority in number of Arcadium shareholders present and voting — representing at least 75% of the voting rights of all shares voted.
“Acquiring Arcadium Lithium is a significant step forward in Rio Tinto’s long-term strategy, creating a world-class lithium business alongside our leading aluminium and copper operations to supply materials needed for the energy transition. Arcadium Lithium is an outstanding business today and we will bring our scale, development capabilities and financial strength to realise the full potential of its Tier 1 portfolio. This is a counter-cyclical expansion aligned with our disciplined capital allocation framework, increasing our exposure to a high-growth, attractive market at the right point in the cycle.”
— Jakob Stausholm, CEO of Rio Tinto
“We are confident that this is a compelling cash offer that reflects a full and fair long-term value for our business and de-risks our shareholders’ exposure to the execution of our development portfolio and market volatility. This agreement with Rio Tinto demonstrates the value in what we have built over many years at Arcadium Lithium and its predecessor companies, and we are excited that this transaction will give us the opportunity to accelerate and expand our strategy, for the benefit of our customers, our employees, and the communities in which we operate.”
— Paul Graves, CEO of Arcadium Lithium
Transaction Terms
The $5.85 per share cash consideration represents a 90% premium to Arcadium’s closing price of $3.08 on October 4, 2024 — the last trading day before the announcement — and a 39% premium to Arcadium’s volume-weighted average price since the company was formed from the merger of Allkem and Livent on January 4, 2024.
The transaction is not subject to a financing condition and will be funded from Rio Tinto’s existing liquidity2. Rio Tinto expects to maintain its strong balance sheet consistent with a Single A credit rating following the close. Arcadium’s projected growth capital expenditure is expected to represent approximately 5% of Rio Tinto’s group capital expenditure of up to $10 billion across 2025 and 2026.
| Term | Details |
|---|---|
| Transaction Value | ~$6.7 billion (equity value, including convertible notes) |
| Per Share Price | $5.85 per share in cash |
| Consideration | All-cash |
| Premium to Close | 90% to October 4, 2024 closing price ($3.08) |
| Premium to VWAP | 39% to VWAP since Arcadium formation (January 4, 2024) |
| Financing Condition | None; funded from existing Rio Tinto liquidity |
| Transaction Structure | Jersey scheme of arrangement |
| Shareholder Threshold | Majority in number representing ≥75% of voting rights |
| Expected Closing | Mid-2025 |
Rio Tinto stated that its dividend policy remains unaffected by the transaction and that it intends to honour its existing policy and practices on shareholder distributions. Arcadium’s projected growth capital expenditure represents a relatively small addition to Rio Tinto’s overall capital program, preserving the group’s financial flexibility.
Strategic Rationale
Rio Tinto has spent several years evaluating how to enter the lithium market at scale, and the Arcadium acquisition represents its conclusion: a vertically integrated, low-cost platform with diversified extraction capabilities across brine, hard rock, and direct lithium extraction (DLE) — technologies that Rio Tinto believes will define the next generation of lithium supply. Lithium demand is expected to exceed 10% compound annual growth through 2040, with a structural supply deficit emerging by the end of the decade according to Benchmark Mineral Intelligence.
The timing is deliberate. With spot lithium prices down more than 80% from peak levels, Rio Tinto framed the acquisition explicitly as counter-cyclical — a point Stausholm repeated across the press release and investor call. Arcadium had recently slowed several expansion projects due to capital constraints as a standalone company; Rio Tinto’s balance sheet removes that bottleneck.
“The primary constraint for us clearly has been capital. You have to look at the size of Arcadium relative to what our ambitions are, and you understand what a challenge we set for ourselves. There’s no doubt Rio will massively accelerate those capabilities.”
— Paul Graves, CEO of Arcadium Lithium, Investor Call Q&A, October 9, 2024
The geographic fit is also a central part of the rationale. Arcadium’s lithium brine operations in Argentina sit near Rio Tinto’s Rincon project, and its hard-rock development assets in Québec are adjacent to Rio’s existing Canadian aluminium and iron ore operations. Rio Tinto plans to establish what it describes as world-class lithium hubs in both Argentina and Canada, leveraging shared infrastructure, local knowledge, and workforce.
Direct Lithium Extraction (DLE)
Direct Lithium Extraction is an emerging processing technology that recovers lithium from brine using selective adsorption or ion exchange, rather than traditional evaporation ponds. DLE offers a smaller land and water footprint than conventional brine methods and can recover a significantly higher proportion of lithium from the resource. Arcadium — through its predecessor Livent — is widely regarded as the pioneer of DLE at commercial scale. Rio Tinto has also been developing DLE at its Rincon project in Argentina.
On synergies, Stausholm deliberately avoided quantifying specific cost savings, focusing instead on the value of accelerating Arcadium’s project pipeline — particularly two projects that Arcadium had decelerated to preserve cash, which he suggested could be brought online two years earlier under Rio Tinto ownership, adding approximately 50,000 additional tonnes of lithium product capacity.
“This transaction gives us the platform to create the world’s leading lithium business in the next few years. Rio Tinto already has one of the highest growth stories with copper; with Arcadium, we believe we are positioned to have the world’s biggest growth story for lithium.”
— Jakob Stausholm, CEO of Rio Tinto, Investor Call Script, October 9, 2024
“Lithium demand globally this year is probably about 1.3, 1.5 million tonnes. By the end of the decade, it’s going to be 3, 3.5 million tonnes. The expansion needed to meet that cannot all be done by low-cost production. The market is going to be undersupplied by the end of the decade, particularly when prices stay where they are today. And the cost curve, we believe, is only going to get steeper.”
— Paul Graves, CEO of Arcadium Lithium, Investor Call Q&A, October 9, 20243
About the Companies
Arcadium Lithium was formed in January 2024 from the merger of Allkem and Livent, creating one of the world’s leading vertically integrated lithium chemicals producers. The company has current annual lithium production capacity of 75,000 tonnes lithium carbonate equivalent across lithium hydroxide and carbonate products, with expansion plans designed to more than double capacity by the end of 2028. Its approximately 2,400 employees operate facilities and projects in Argentina, Australia, Canada, China, Japan, the United Kingdom, and the United States.
Arcadium holds the world’s largest lithium resource base on a combined pro-forma basis, with Tier 1 assets — large, long-life, low-cost and expandable — that have maintained high margins through lithium price cycles. The company’s commercial relationships span blue-chip OEM and battery customers including Tesla, Panasonic, BMW, General Motors, and Ford, built over multi-year contracted supply agreements.
Rio Tinto is one of the world’s largest mining companies, with leading positions in iron ore, aluminium, and copper. The Arcadium acquisition adds lithium as the fourth pillar of Rio Tinto’s energy transition commodity portfolio, completing a suite that now covers the key materials found in EV battery cells and electric grid infrastructure.
Transaction advisors for Rio Tinto include Goldman Sachs and J.P. Morgan as financial advisors, and Linklaters as lead legal advisor. Arcadium retained Gordon Dyal & Co. and UBS Investment Bank as financial advisors, and Davis Polk & Wardwell as legal counsel.