After aluminum, lithium. By purchasing the American company behind Nemaska Lithium, one of the flagship projects in the Quebec battery industry, Rio Tinto is seizing a dominant position in this market considered the backbone of the electrification of transport.
“We want to be in sectors where there will be needs in the next decade to ensure the transition,” indicates Rio Tinto CEO Jakob Stausholm on the phone with La Presse. “For us, that means being present in both aluminum and copper and the materials needed for battery components. »
The US 6.7 billion transaction – the largest since 2007 – allows the mining giant to rise to third place among lithium producers in the world, behind the American Albemarle and the Chilean SQM. It will also have significant ramifications in Quebec.
Concretely, Rio Tinto will acquire half of Nemaska Lithium – a key company in the Quebec battery ecosystem 50% owned by the Quebec state – as well as a mining project valued at 380 million in the James Bay sector.
Last year, the multinational laid the foundations for its foray into the Quebec lithium niche by partnering with two exploration companies, Midland and Azimut, which are prospecting in the lithium niche in the energy sector. James Bay. However, we are talking about projects that have not yet come to fruition.
Arcadium adds to assets currently held by Rio Tinto, namely a lithium borate mine in Serbia and a lithium brine project in Argentina, in the so-called lithium triangle.
The transaction in figures
- Rio Tinto offers $5.85 per share
- Transaction estimated at 6.7 billion US dollars
- Arcadium owns 7 processing plants and as many mining projects
Rio Tinto buys at a discount. Over the past two years, lithium prices have fallen by 80%, thereby weakening many mining developers and lithium processors. Even offering a price per share 90% higher than what Arcadium was worth last week, Rio Tinto’s offer is considerably lower (-17%) than what the company’s stock was worth in January.
Nevertheless, everyone comes out a winner according to Jakob Stausholm: “Arcadium has undeniable strengths in marketing, in operations and it has important customers”. Already, the Pennsylvania-based company supplies lithium to automotive giants like BMW, Ford, GM, Panasonic, Tesla, and Toyota.
Even bigger
Already the owner of five aluminum smelters in Quebec, Rio Tinto will see its footprint expand into another niche in the province. In Quebec, Nemaska Lithium constitutes the most important catch for the mining giant.
This project aims to transform lithium extracted from the Whabouchi mine, approximately 300 kilometers from James Bay, to then produce lithium hydroxide – essential for the manufacture of lithium-ion batteries for electric vehicles – in Bécancour. This project will cost at least two billion. Quebec plans to inject up to 425 million into the second version of the company.
Currently, there is only one active lithium mine: that of Lithium America North, owned by Sayona (75%) and Piedmont Lithium (25%), in La Corne, in Abitibi-Témiscamingue. .
The essential lithium
Lithium is an essential element in the manufacture of lithium-ion batteries found in mobile devices and in electric and hybrid cars. The lightest of all metals has become the backbone of the electrification of transportation and technologies to store energy on a large scale. 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.
Michel Jébrak, professor in the department of earth and atmospheric sciences at UQAM, is not surprised by Rio Tinto’s decision. In a lithium market in overcapacity for a few more years, it is good news to see a well-established player interfering in the battery sector, believes the specialist.
“This means that we have a major company with strong backbones that will be able to withstand the cycles,” he said. Rio Tinto bought the most accessible company at the right time. »
PHOTO KARENE-ISABELLE JEAN-BAPTISTE, THE PRESS
Michel Jébrak, professor of geology at UQAM
Arcadium Lithium, which operates projects in seven countries and has nearly 1,500 employees, had not escaped the difficult context in the industry. Last August, the company announced that it was cutting its investment spending by around CAN 690 million over two years.
According to S&P Global, the global lithium market is expected to remain in “excess capacity” until 2027.
At the Bécancour Industrial and Port Park Company, President and CEO Donald Olivier welcomes Rio Tinto’s breakthrough. This multinational is already present in the region through its 25% stake in the ABI aluminum smelter.
“The first word that comes to mind is financial robustness,” says Mr. Olivier. It’s positive. They invest in a promising project. »
Read the article “Battery sector: Rio Tinto targets a key project”
Read the article “Rio Tinto’s lithium strategy in Quebec”