Rio Tinto in talks to buy lithium miner Arcadium, sources tell Reuters

Rio Tinto has been in talks to acquire the lithium miner AkadimThree sources with direct knowledge of the negotiations said the deal would make Rio Tinto the third-largest producer of electric vehicle battery metals.

Talks have been ongoing and continue this week in London. LME weekly meeting” said a source. An offer is expected to be made in the near future, according to a second source. Negotiations are ongoing and a deal may or may not be reached, sources said.

A third source said Philadelphia-based Arcadium could be valued at $4 billion to $6 billion, or higher. None of the sources were authorized to discuss the negotiations publicly.

The deal will make Rio Tinto one of the world's largest suppliers of ultra-light metals, second only to Albemarle and Quality managementas Demand is expected to surge Later in the decade, lithium-ion batteries are increasingly used in electric vehicles and consumer electronics.

The recent slump in lithium prices is partly due to China's supply glutArcadium's shares have fallen more than 50% since January, making it an attractive takeover target.

It was unclear whether the deal consisted primarily of cash, stock or a mix of the two. Arcadium has selected two investment banks to handle talks with Rio Tinto, a second source said.

Through the acquisition of Arcadium, Rio Tinto will gain access to lithium mines, processing facilities and mineral deposits across four continents to fuel decades of growth and gain access to a customer base that includes: Tesla, BMW and General Motors.

Arcadium and Rio Tinto declined to comment.

The Anglo-Australian miner is already one of the world's largest producers of copper, which is used to make wires, construction equipment, electronics and other equipment, as well as iron ore and other metals.

Arcadium has approximately 2,400 employees in nine countries. About 84% of its revenue comes from Asia – the existing center of global lithium demand – and the company has the potential to grow as electric vehicle projects increase in the Western Hemisphere, especially those supported by U.S. inflation-cutting bills.

Rio faces backlash in Serbia Proposed Jadar Minewhich was recently relicensed. Local community members have repeatedly pressured Belgrade to block the project, which has the potential to meet much of Europe's demand for battery metals.

A second source said Arcadium believed Rio Tinto was unlikely to develop the Serbian project.

Rio could also benefit from Arcadium’s expertise Lithium extraction directlyis a growing segment of the lithium industry designed to mechanically filter metals from brine.

No company has commercially launched the DLE process without evaporation ponds, but Arcadium has been successfully using DLE in ponds in Argentina since the 1990s, and its engineers are widely regarded as global experts.

rio $825 million to be paid in 2022 A DLE project in Argentina has not yet produced the metal.

Arcadium was launched in January American Livent and Australian Allkem mergeeach company gets the same number of seats on the company's 12-person board of directors.

Speculation about a potential collaboration between Arcadium and Rio has been swirling for weeks.

“Arcadium provides a full suite of services to Rio Tinto,” Scotiabank analysts said on September 10, adding that “the case (for the acquisition) has strengthened.”

In a presentation to investors on September 19, Arcadium laid out an aggressive growth strategy to nearly triple adjusted earnings by 2028 by developing lithium projects around the world.

Rio Tinto's interest in Arcadium comes amid rising interest in deals across the mining industry, particularly in critical minerals needed to drive the world's energy transition.

BHP Billiton – The world's largest miner – earlier this year Bid failed for smaller competitors Anglo American. GlencoreBHP Billiton and others are seen as potential bidders for other key mineral projects.