Lithium firms’ shares rise after Rio Tinto buyout chatter

Shares in a handful of lithium players gained Friday after speculation in the daily publication The Australian that Rio Tinto (NYSE: RIO; LSE: RIO; ASX: RIO) might bid to buy Albemarle (NYSE: ALB) and/or Arcadium Lithium (NYSE: ALTM; ASX LTM). 

Albemarle, the world’s largest lithium producer, gained 5.9% to US$99.95 each, for a market capitalization of US$11.7 billion. Arcadium, one of the world’s largest producers of the battery metal, rose 9.2% to US$3.07, valuing the company at US$3.3 billion.

Shares in other lithium companies also gained. SQM (NYSE: SQM) went up 2.3% to US$41.40 apiece, giving it a US$11.3-billion market cap; Lithium Americas (TSX: LAC) was up 6.7% to $3.64, for a $793.5 million market value; and Standard Lithium (TSXV: SLI, NYSE: SLI) gained 5.6% to $2.24 apiece, for a market capitalization of $386.9 million.

Albemarle said in an email to The Northern Miner that it wasn’t going to comment. The other lithium companies didn’t immediately respond to requests for comment.

The acquisition talk comes as Rio faces challenges in developing its Jadar lithium project in Serbia that has been halted since 2022 out of concerns about environmental damage. But the project could become Europe’s biggest mine of the battery metal.

The buyout speculation also comes amid the ongoing slump in lithium prices, which have dropped 88% over the past two years. Battery-grade lithium hydroxide has fallen to US$9,925 per tonne on Friday from US$22,275 a year ago and around US$85,000 a tonne in late 2022, according to The Wall St. Journal.

Lithium pitfalls, promise

Albemarle in January laid off more than 300 employees amid the price decline, and said it would reduce investment to US$1.6 billion to US$1.8 billion this year, down from about US$2.1 billion it invested last year.

Arcadium, formed through the merger of Livent and Allkem last January, said in August it was pausing its Galaxy project in Quebec due to the current economics of building lithium projects. And last month, it announced plans to put its Mt. Cattlin spodumene mine in Western Australia into care and maintenance. 

Meanwhile, Rio Tinto has over the last six years has shown increasing interest in the lithium space. In 2018, it reportedly tried to buy a US$5 billion stake in SQM and in 2021, it started lithium production from waste rock at a demonstration plant located at a borates mine it controls in California. 

In 2022, it acquired the Rincon project in Argentina, where it plans to develop a battery-grade lithium carbonate plant with an annual capacity of 3,000 tonnes. It has earmarked US$350 million for the project.