Monsters of Rock: Rio Tinto’s path clear for $10bn lithium takeover

Rio Tinto is placed to closed its transaction to acquire Arcadium Lithium next month after receiving all foreign investment approvals.

Josh Chiat

3 min read

February 14, 2025 - 5:03PM

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Rio's about to seal the (lithium) deal. Pic: Getty Images

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Rio Tinto set to complete $10bn takeover of Arcadium within a month
Iron ore prices rise as cyclone hits Pilbara
Chinese investors roll lithium junior's board

Rio Tinto (ASX:RIO) is closing in on the acquisition of Arcadium Lithium (ASX:LTM), taking another major step to seal its $10 billion counter-cyclical bid to enter the upper echelons of the battery metal's suppliers.

The world's second biggest miner announced the deal last year, which promises to make it a 75,000tpa lithium carbonate equivalent producer right off the bat with two brine operations in Argentina.

Should the deal go through, Rio's balance sheet strength could put expansions delayed by Arcadium, borne of the merger between Allkem and Livent, back on the agenda along with its 60,000tpa Rincon project, already sanctioned late last year. The Arcadium assets could be more than doubled in capacity by 2028.

It comes as analyst RhoMotion reported another year on year lift in electric vehicle sales in January 2025, up 18% to 1.3 million units.

That was led by a 21% lift in Europe and the UK, and 12% rise in China, though seasonal weakness saw sales decline 35% month on month.

While demand for lithium continues to grow strongly, oversupply has suppressed prices.

Arcadium announced that it had satisfied merger control clearance or had it waived in Australia, Canada, China, Japan, South Korea, the UK and US, with investment screening approval satisfied in Australia, Canada, Italy, the UK and US.

The court date to sanction the deal will be heard in the Royal Court of Jersey on March 5, paving the way for the transaction, already supported by Arcadium shareholders, to close on March 6.

While Rio Tinto shares lifted, as did Arcadium's, the rest of the lithium sector was sold off as a lift possibly associated with fears of supply cuts due to a tropical cyclone off Port Hedland on Thursday dissipated.

Rio's entry to the lithium space brings a diversified and cashed up group that, like Chinese investors, will have the capital behind it to grow market share even when margins are weak like they are now.

"The lithium market remains relatively small with few players, meaning the likelihood of additional M&A could increase. In the longer-term, there is risk that Rio's expansion into lithium could keep markets well supplied, lowering long-term price estimates," E&P's Adam Martin said when the deal was announced.

"We think this will take a number of years to play out and will depend on the rate of demand growth."

Iron ore in motion

Tropical Cyclone Zelia, which is touching down on land today with 290km/h winds in tow, could bring as much as 500mm of rain over the next three days.

It's prompted the closure of Port Hedland, the world's largest iron ore export terminal home to shipments from BHP, FMG, Roy Hill and MinRes, as well as Rio's Dampier, Cape Lambert and Varanus Island ports.

Cyclone Zelia expected to cross the Pilbara coast east of Port Hedland as a Cat 5 system. Huge winds but may spare Port Hedland the worst of the flooding risk given wind direction and ebb tide. SGX iron ore trading at 5-month highs #ausbiz $AUD pic.twitter.com/M707qW0cTs
â€” David Scutt (@Scutty) February 14, 2025

Iron ore is now at five month highs in Singapore, lifting 2% to US$108.65/t today.

That's done little for the majors, who are relatively flat, though Canadian iron ore miner Champion Iron (ASX:CIA) is benefitting from the price bump, with its shares up 2.67% on Friday.

Global Lithium blow up

And in the former monsters space, Global Lithium Resources (ASX:GL1), which at one time commanded $500 million market cap territory as record lithium prices floated every boat, sank over 4% after three Chinese born executives succeeded in rolling its board on Thursday.

Executive chair Ron Mitchell and non-exec director Matt Allen, having failed to secure intervention from either the Takeovers Panel or the Federal Government, fell on their sword at the company's AGM.

GL1, which counts MinRes as one of its top shareholders, owns the Manna and Marble Bar lithium deposits in WA.

Dianmin Chen, a long time resident of Australia who was notably once the local managing director of Zijin's Australian subsidiary Norton Gold Fields, was re-elected and has become MD and CEO of the explorer.

Property investor Liaoliang (Leon) Zhu and former Sinosteel Australia MD Xiaoxuan (David) Sun will also join the board after Zhu, its third biggest shareholder, led attempts to roll the company's existing management.

Manna, located 100km east of Kalgoorlie, contains a resource of 51.6Mt at 1% Li2O.

“For Manna to realise its maximum value for shareholders in this market, we must focus on delivering three key milestones with the project in 2025,” Chen said.

“The first priority is concluding a Native Title Mining Agreement with the Kakarra Part B Native Title Group, so the local community is aligned with the company’s future approach.

“A mutually successful outcome with Native Title partners is essential for a Mining Lease application to be granted for Manna, which in turn is central to the completion of a Definitive Feasibility Study on the project."

GL1 shares are currently worth 23c for a $60m market cap, having peaked at $2.78 in September 2022.