Mining giant Rio Tinto announced today an agreement to acquire Philadelphia-based lithium chemicals producer Arcadium Lithium, in a transaction described by Rio Tinto as aimed at “establishing a global leader in energy transition commodities.”

Tinto will pay $6.7 billion for the company in the all-cash transaction, paying shareholders $5.85 per share, a 90% premium over Arcadium’s October 4, 2024 closing price of $3.08 per share. The deal is expected to close in mid-2025.

Rio Tinto is already one of the world’s biggest producers and processors of iron ore, copper, aluminum and a range of other minerals and materials. With the acquisition, Rio TInto will become one of the world’s largest suppliers of lithium, Rio Tinto said. Lithium is in high demand for numerous products, especially lithium-ion batteries used in electric cars. Adding lithium to its current supply of aluminum, copper and high-grade iron ore better positions the company to be a global leader in energy transition commodities, Rio Tinto said.

Arcadium’s current annual lithium production capacity across a range of products, including lithium hydroxide and lithium carbonate, is 75,000 tons lithium carbonate equivalent, with expansion plans in place to more than double capacity by the end of 2028. Arcadium’s global operations, comprising approximately 2,400 employees, include facilities and projects in Argentina, Australia, Canada, China, Japan, the United Kingdom and the United States.

Arcadium Lithium CEO Paul Graves said:

“Arcadium Lithium is a leading global lithium producer with the widest offering of lithium chemical products and a world-class manufacturing network, backed by a broad technology portfolio and expertise in all aspects of the lithium value chain. 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.”

Rio Tinto said in a statement that the timing allows the company to take advantage of a worldwide dip in lithium prices. Spot lithium prices are currently down more than 80% over their peak, but that is unlikely to last, as demand rises by some 10% annually, with demand expected to outstrip supply by 2040. The company added that Rio Tinto and Arcadium both have a presence in several geographical areas, including Argentina and Quebec, where Rio Tinto plans to establish lithium production and processing sites.

Rio Tinto CEO Jakob Stausholm said:

“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.”