Rio Tinto wants to become a key player in the battery industry. By swallowing the prey it covets, Arcadium Lithium, the mining giant would recover half of Nemaska Lithium, the second largest project in the province after Northvolt, in which Quebec has invested the most money. What are the ambitions of the multinational?
PHOTO DAVID GRAY, REUTERS ARCHIVES
The Anglo-Australian mining group Rio Tinto confirmed in a press release on Monday that it had contacted Arcadium Lithium to buy it.
Transaction in sight
The Anglo-Australian mining group Rio Tinto confirmed in a press release on Monday that it had contacted Arcadium Lithium to buy it: “This approach is not binding and there is no certainty that a transaction will be accepted or will continue. . » No amount related to this possible transaction has been advanced. The stock market value of the American Arcadium would oscillate around 4.33 billion dollars. The reaction on the markets was instantaneous. Arcadium Lithium stock jumped nearly 30% Monday morning following the announcement.
A big impact in Quebec
Owned equally by Arcadium and Quebec, Nemaska Lithium tops the list. The company aims to transform lithium extracted from its Whabouchi mine, north of Chibougamau, to produce lithium hydroxide in Bécancour, essential in the manufacture of lithium-ion batteries for electric vehicles. This is the only project in the Quebec sector capable of supplying manufacturers of battery materials of this kind. His bill: 2 billion dollars. So far, Quebec has committed to putting 425 million into the adventure. Arcadium’s other Quebec asset is a lithium deposit in the James Bay sector. However, this project is not yet out of the ground, because investments are on ice. This project is estimated at 380 million.
PHOTO HUGO-SÉBASTIEN AUBERT, LA PRESSE ARCHIVES
Lithium is essential in the manufacture of lithium-ion batteries found in mobile devices – such as phones and laptops – and in electric and hybrid cars.
The importance of lithium
Lithium is popular, and that’s normal. The element is essential in the manufacture of lithium-ion batteries found in mobile devices – such as phones and laptops – and in electric and hybrid cars. The lightest of all metals has become over the years the backbone of the electrification of transport, but also a key in the development of low-carbon technologies and those for storing energy on a large scale. In nature, lithium is never present alone; it is always combined with other minerals. If, in Quebec, lithium occurs in a solid form in minerals such as spodumene, it can take the form of brine elsewhere in the world.
PHOTO CARLA GOTTGENS, BLOOMBERG ARCHIVES
According to S&P Global, the global lithium market is expected to remain in “excess capacity” until 2027.
Prices falling
Sales of electric vehicles are increasing, but it is not the revolution expected by governments and project promoters. Result: the bubble burst and prices collapsed. And it’s not over yet. According to S&P Global, the global lithium market is expected to remain in “excess capacity” until 2027. “Electric vehicle sales are weaker than expected and inventories [de batteries] are still very high,” emphasized its analysts Federico Gay and Sophia Jang, in a summer note. A tonne of lithium spodumene – the raw material that is processed – is worth approximately US$10,760. We are talking about a price seven times lower compared to the fall 2022 peak.
PHOTO MARTIN BERNETTI, AGENCE FRANCE-PRESSE ARCHIVES
Across the world, cutbacks have been made and expansion plans put on hold at mining companies and processors of critical minerals.
Difficult context
Across the world, cutbacks have been made and expansion plans put on hold at mining companies and processors of critical minerals. Arcadium Lithium, which operates projects in seven countries and has nearly 1,500 employees, has not escaped this. Last August, the company announced that it was cutting its investment spending by around CAN 690 million over two years. “I think the best way to describe the market is as schizophrenic,” Arcadium CEO Paul Grave said in a recent interview with The Press. It’s a market that struggles to have a long-term vision. None of this is conducive to price stability. »
PHOTO VLADIMIR ZIVOJINOVIC, THE NEW YORK TIMES ARCHIVES
Rio Tinto already operates a lithium borate mine in Serbia. In the photo, a company geologist shows a map of the region.
An opportunity for Rio Tinto
With this transaction, Rio Tinto would become the third producer of lithium in the world, behind the American Albemarle and the Chilean SQM. The multinational already operates a lithium borate mine in Serbia and is planning another lithium brine mine in Argentina, in the province of Salta, nicknamed the lithium triangle. In Quebec, Rio Tinto joined forces in 2023 with the promoters of the Midland and Azimut exploration projects. “Arcadium is a gateway to finding more advanced assets [soit Nemaska Lithium] », According to Eric Lemieux, mining analyst at EBL Consultant. “It’s smarter to buy when the price is low than to pay large premiums. » Rio Tinto is also a major producer of another coveted metal in the sector: copper.