Rio Tinto has been holding talks to purchase lithium miner Arcadium, three sources with direct information of the negotiations mentioned, a deal that may make Rio the third-largest producer of the electrical automobile battery steel.

Talks have been ongoing and continued in London this week throughout the LME Week conference, one of many sources mentioned. A proposal is anticipated to come back within the close to future, based on the second supply. Talks are ongoing and will not essentially lead to a deal, the sources mentioned.

Philadelphia-based Arcadium might be valued between $4 billion to $6 billion or larger, the third supply mentioned. Not one of the sources had been approved to debate the negotiations publicly.

The deal would vault Rio into one of many world’s largest suppliers of the ultralight steel, behind solely Albemarle and SQM, simply as demand is expected to surge later this decade amid rising use of lithium-ion batteries for EVs and shopper electronics.

The latest stoop in lithium costs, which is due partially to Chinese oversupply, has pushed Arcadium’s shares down greater than 50% since January, making it a beautiful takeover goal.

It was not instantly clear if a transaction would primarily embrace money, inventory or a combination of each. Arcadium has chosen two funding banks to deal with its negotiations with Rio, based on the second supply.

By shopping for Arcadium, Rio would acquire entry to lithium mines, processing amenities and deposits throughout 4 continents to gasoline a long time of progress, in addition to a buyer base that features Tesla, BMW and General Motors.

Arcadium and Rio Tinto declined to remark.

The Anglo-Australian mining firm is already one of many world’s largest producers of copper – used to make wiring, building tools, electronics and different units – in addition to iron ore and different metals.

Arcadium has round 2,400 workers throughout 9 international locations. Roughly 84% of its income comes from Asia – the present world middle for lithium demand – giving it progress potential as EV tasks ramp up throughout the Western Hemisphere, particularly these supported by the U.S. Inflation Discount Act.

Rio faces sturdy opposition in Serbia to its proposed Jadar mine, for which it not too long ago regained its license. Local people members have repeatedly pressured Belgrade to dam the venture, which has the potential to provide a lot of Europe’s wants of the battery steel.

Arcadium believes it’s unlikely Rio will ever have the ability to develop the Serbian venture, the second supply mentioned.

Rio might additionally profit from Arcadium’s experience in direct lithium extraction, a rising phase of the lithium business that goals to mechanically filter the steel from brines.

No firm has commercially launched a DLE course of with out evaporation ponds, however Arcadium has efficiently been utilizing DLE because the Nineties with ponds in Argentina and its engineers are broadly seen as world specialists.

Rio paid $825 million in 2022 for a DLE venture in Argentina that has but to provide the steel.

Arcadium was shaped solely in January by the merger of U.S.-based Livent and Australia-based Allkem, with every firm getting an equal variety of slots on the corporate’s 12-person board of administrators.

Hypothesis of a possible tie-up between Arcadium and Rio has floated for weeks.

“Arcadium gives Rio the total bundle,” Scotiabank analysts mentioned on Sept. 10, including that “the case (for a buyout) has strengthened.”

At a presentation to traders on Sept. 19, Arcadium laid out an aggressive progress technique to almost triple its adjusted earnings by 2028 by creating its lithium tasks throughout the globe.

Rio’s curiosity in Arcadium comes amid a rising wave of deal curiosity throughout the mining business, particularly for important minerals wanted to energy the worldwide power transition.

BHP – the world’s largest miner – earlier this 12 months made an unsuccessful bid for smaller rival Anglo American. Glencore, BHP and others are seen as potential bidders for different important minerals tasks.