Rio Tinto Group’s (RIO – Free Report) offer to acquire Arcadium Lithium (ALTM – Free Report) received all requisite ALTM shareholder approvals. The buyout will position Rio Tinto as the world’s third-largest lithium miner.
The transaction, which Rio Tinto announced on Oct. 9, 2024, is expected to close in mid-2025.
Arcadium Lithium – A Strategic Fit for RIO
Arcadium Lithium produces lithium hydroxide, a key component for manufacturing lithium greases, dyes, resins and other specialty applications. Its products are also used in making polymers in a wide range of applications, from fuel-efficient “green” tires to stronger, more flexible adhesives and other pharmaceutical applications.
Rio Tinto will acquire Arcadium Lithium in an all-cash transaction of $5.85 per share, adding Arcadium Lithium’s world-class, complementary lithium business into RIO’s portfolio. This positions RIO as a global leader in energy transition commodities.
Rio Tinto’s Focus to Grow Lithium Portfolio
RIO is working on building its lithium portfolio to capitalize on the rising demand for batteries and electric vehicles. Arcadium Lithium, with its top-tier assets, a wide range of products, focus on innovation, flexible network and solid growth plan, will play a key part in Rio Tinto’s growth plans.
On Dec. 13, 2024, RIO announced it would invest $2.5 billion in its first commercial-scale lithium operation, the Rincon project, in Argentina. This move is in sync with Rio Tinto’s goal to build a world-class battery material portfolio.
Rincon, a long-life asset, is designed to produce 60,000 tons of battery-grade lithium carbonate per year. This includes a 3,000-ton starter plant and a 57,000-ton expansion plant. The mine’s ore reserves are 60% higher than the company projected at the time of acquisition. It is expected to operate in the lowest quartile of the cost curve.
The project employs direct lithium extraction technology. This process promotes water conservation, lowers waste and yields lithium carbonate more consistently than other processes.
RIO Stock’s Price Performance
In the past year, shares of Rio Tinto have lost 15.3% compared with the industry’s 19.1% decline.
Image Source: Zacks Investment Research
Rio Tinto’s Zacks Rank & Stocks to Consider
The company currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the basic materials space are Carpenter Technology Corporation (CRS – Free Report) and CF Industries Inc. (CF – Free Report) . CRS sports a Zacks Rank #1 (Strong Buy) at present and CF carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Carpenter Technology has an average trailing four-quarter earnings surprise of 14.1%. The Zacks Consensus Estimate for CRS’s fiscal 2025 earnings is pegged at $6.61 per share. Its shares skyrocketed 144.2% in the last year.
CF Industries has an average trailing four-quarter earnings surprise of 10.3%. The Zacks Consensus Estimate for CF’s 2024 earnings is pegged at $6.32 per share. CF shares gained 8.8% in the last year.
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