Rio still needs FIRB tick for near $11bn lithium takeover
US regulators have declared they have no national security concerns over Rio Tinto’s near-$11bn takeover of Arcadium Lithium.
Rio Tinto has cleared what some saw as the last big hurdle to securing Arcadium Lithium, with regulators in the US declaring they have no national security concerns about the near-$11bn takeover deal.
The outcome of a review by the Committee on Foreign Investment in the US was being closely watched given Chinese state owned-entity Chinalco’s 10.3 per cent stake in Rio across the mining giant’s dual London and ASX listings.
Arcadium said the deal still required investment screening approvals in Australia, Canada and Italy, but it expected to settle the transaction before mid-2025. It is understood Australia’s Foreign Investment Review Board has yet to tick off on the deal.
Rio is betting big on lithium in contrast to mining peers like BHP and Glencore who have opted to steer clear of investment in the battery ingredient.
Arcadium, listed in New York and on the ASX, told investors the US Committee had concluded its review and determined there were no unresolved national security concerns.
The update saw Arcadium’s chess depositary interests trading on the ASX jump more than 8 per cent to $9.14 in trading on Thursday, the highest point since Rio unveiled its $US6.7bn ($10.8bn) takeover offer last October.
In New York, the stock jumped to $US5.70, still below Rio’s all-cash offer price of $US5.85. The Rio offer was lobbed on October 7 at a 90 per cent premium to Arcadium’s market value at the close of the previous trading day.
The takeover has been subject to various approvals or waivers in Australia, Canada, China, Japan, South Korea, the UK and the US.
Arcadium, formed via the $US10bn merger of Allkem and Livent in 2023, has lithium brine assets in Argentina as well as a struggling hard rock lithium mine in WA it moved to put into mothballs last year.
Rio is aiming to build three lithium brine super sites in Argentina, including Arcadium’s Sal de Vida and Olaroz operations, and has ambitions to build other projects in South America and Canada which it will pick up in the takeover.
Arcadium’s other assets include lithium processing plants in Japan, China and North America, with Tesla, BMW and General Motors among its carmaker customers.
In December, Rio committed $US2.5bn to expanding its Rincon operations in the Andes in Argentina as it grows more confident in brine projects and direct lithium extraction (DLE) technology.
Goldman Sachs expects lithium market softness to continue in 2025 with existing producers likely to focus on further cost and production cuts, and has predicted more takeover deals.
“We continue to expect M&A activity could remain increasingly prevalent as valuations decline with expectations for medium-term lithium pricing,” it said in a note to clients.
Goldman Sachs analysts said over the medium-to-longer term they preferred “briners over miners”, with a growing focus on costs and weak lithium prices casting doubt on the development some spodumene, or hard rock, mines.
Hard rock lithium mines in WA have produced a big chunk of world supply in recent years.
Goldman Sachs said big oil and gas producers like Exxon, Schlumberger, Equinor, Occidental and Saudi Aramco were showing growing interest in lithium, particularly across North American brines.
