A bid would continue bold deal making at the big end of the mining sector, with BHP unsuccessfully trying to acquire Anglo American in May.
Investors are willing to back Rio Tinto’s counter-cyclical bet on Arcadium Lithium but suggested the mining giant may need to pay close to $9 billion to convince shareholders it is more than an opportunistic raider at the bottom of the battery metal price cycle.
That triggered a 45 per cent rise in Arcadium’s Australian-listed securities, which have risen more than 80 per cent over the past month as investors bet that the lithium price rout is over.“Arcadium Lithium remains focused on executing its strategic vision and pathway to significant growth, as set forth in its recent investor day presentation in September 2024.”
Arcadium’s market value was $US3.3 billion on Friday, but most analysts and investors expect Rio will need to pay substantially more given the target was worth more than $US5.1 billion as recently as January. Wilson Asset Management holds both Rio and Arcadium shares in its WAM Leaders strategy, whose portfolio manager Matt Haupt agreed that Arcadium would benefit from Rio’s capacity for investment.
Arcadium was created in January through the merger of ASX-listed Allkem and the US company Livent. While its primary sharemarket listing is in New York, it also has securities that trade on the ASX.It produces lithium from groundwater in Argentina and also has hard-rock lithium mining assets in Western Australia and Canada. Mr Stein estimates Arcadium will supply about 5 per cent of the world’s lithium next year and that could climb to 6 per cent by 2028.
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