Rio Tinto to be key player in Argentina's lithium sector with $6.7bn Arcadium purchase

Rio Tinto’s US$6.7bn acquisition of Australia’s Arcadium Lithium will allow it to become a key lithium player in Argentina, where it is preparing to open a chemical plant at its Rincón project.

Upon completion of the purchase, estimated for mid-2025, London-based Rio Tinto will assume Arcadium's production capacity in Argentina of 75,000t/y of lithium carbonate equivalent (LCE), in addition to its growth plan that will double the volume by the end of 2028, the parties said in a statement.

Currently two Arcadium units are operating in Argentina: Hombre Muerto, which includes the under-expansion Fénix plant and the Güemes lithium chloride plant, with total capacity of 32,000t/y LCE; and Olaroz, which contributes 43,000t/y LCE.

Sal de Vida is under construction and, together with its first phase and planned expansions, is due to achieve 45,000t/y of LCE, while Cauchari is in the process of obtaining environmental permits and has estimated capacity of 25,000t/y LCE.

Fénix and Güemes are located in the provinces of Salta and Catamarca and Sal de Vida is in Catamarca, while Olaroz and Cauchari are in Jujuy.

With the initiatives, Rio Tinto will add nearly 150,000t/y of LCE to the maximum capacity planned for Rincón of 50,000t/y in Salta, and will open a first plant at the end of this year designed to produce 3,000t/y of LCE.

Rio Tinto will not only be a key player in the lithium market before the end of this decade but will continue to play a major role in supplying other products for the energy transition such as copper, iron and aluminum.

Peter Coleman, chairman of Arcadium, told shareholders that the proposal represents the best option to deal with market fluctuations and the contraction in lithium prices, as it will provide certainty and liquidity to carry out all planned investments and meet the challenges of construction, regulation and the market.

"By leveraging Rio Tinto's strong balance sheet, extensive resources, diverse portfolio and expertise, we enhance the likelihood of successfully developing and operating our assets while supporting the clean energy transition", he said.

Rio Tinto's strong balance sheet, extensive resources, diversified portfolio and experience enhance the likelihood of successfully operating our assets," he said in a statement, urging partners to vote in favor of the transaction.

Regarding the emergence of this business amid the decline in the price of the mineral, the lithium expert for UK consultancy SC-Insights and former commercial executive at producing companies such as SQM, Jose Hofer, told BNamericas that “it is one of the few countercyclical investment decisions that have been seen in the market and one of the few Western ones of such magnitude.”

Hofer said Rio Tinto's acquisition will provide a new opportunity to continue diversifying its business. "It is showing that it believes in the medium term in the markets for energy storage, electric vehicles and mainly lithium. In addition, they are taking home a tremendous portfolio of projects," said the former consultant for Benchmark Minerals.