Rio Tinto CEO Jakob Stausholm argues the miner’s long-term investment approach and sheer size can help stabilise the volatile lithium market.
Already a subscriber?For a man who has just paid $US6.7 billion for a company in one of the most volatile sectors in global mining that was worth only $US2.4 billion a month ago, Rio Tinto chief executive Jakob Stausholm is remarkably relaxed.as a chance to bring some stability to a commodity that has been a wild roller-coaster ride for the past five years.Rio isn’t worried about the price movements over the next 12 months.
Stausholm says Arcadium’s beaten-down share price reflects the big movements in the lithium price and the company’s stretched balance sheet, rather than the intrinsic value he sees in the business. If replacement value is your thing, then Stausholm – who personally led the negotiations with Arcadium chairman Peter Coleman and chief executive Paul Graves – has arguably got a bargain.For his part, Coleman is philosophical; Rio was able to bring forward the value that Arcadium just wasn’t in a position to extract at the moment. “They can invest. We can’t,” he says.
Rio is convinced Arcadium owns a portfolio of tier one assets that are low-cost and have long mine lives ahead of them, but some investors will see a collection of smallish, disparate projects concentrated in the risky jurisdiction of Argentina.
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