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Rio Tinto will acquire US company Arcadium Lithium in a $6.7bn (£5.1bn) deal

World’s largest iron ore producer, Rio Tinto will acquire US company Arcadium Lithium in a $6.7bn (£5.1bn) deal.

Before the announcement of the deal, Rio Tinto said that it would pay $5.85 per share for Arcadium, closing for $3.08 on October 3. It is a significant investment on energy transition, amid a growth in the electric car market.

Rio is making a shift in the lithium market as prices for the metal have dropped due to an excess supply from China and a decrease in electric vehicle sales. This has led to lithium miners becoming attractive acquisition targets.

Peter Coleman, the chair of Arcadium, said, “The cash offer would provide shareholders with certainty and liquidity and avoid the risks associated with lithium market fluctuations.”

Rio’s Acquisition to Give Access to Reserves in Argentina, Australia, Canada, and the US

Rio’s acquisition will give access to lithium mines, processing plants, and reserves in Argentina, Australia, Canada, and the US. This plays a crucial role anticipated to be crucial in producing batteries for electric vehicles (EVs) and other purposes.

In the UK, the Society of Motor Manufacturers and Traders (SMMT), the registration of new EVs increased by just 3.7% in September as compared to the previous year. The registrations for new diesel cars increased by 17.2%.

Arcadium Lithium Shares Dropped by 37%

At the beginning of 2024, the shares of Arcadium dropped by more than 37% valuing US$4.56bn.