Rio Tinto's real prize: Arcadium's lithium extraction technology
Rio's $6.7 bln Arcadium buyout brings access to lithium technology
Direct lithium extraction could grow to $10 bln annual industry
Rio CEO thinks DLE could supply much of world's lithium
Analyst sees Rio paying premium for Arcadium's DLE expertise
By Ernest Scheyder and Clara Denina
Oct 10 (Reuters) -Rio Tinto's RIO.LRIO.AX $6.7 billion buyout of Arcadium ALTM.N will give it a suite of lithium filtration technologies that are poised to revolutionize how the metal is produced for the electronics and electric vehicle industries.
Arcadium's expertise in so-called direct lithium extraction (DLE) is the real prize for Rio, analysts said, and vaults it into contention with Eramet ERMT.PA, Sunresin 300487.SZ, Exxon Mobil XOM.N and others aiming to make the technology commonplace in coming years.
The DLE industry is expected to grow to more than $10 billion in annual revenue within the next decade by supplying lithium for EV batteries in hours or days, not months or longer as with existing large, water-intensive evaporation ponds and open pit mines.
While DLE technologies vary, they are comparable to filtration used by common household water softeners and aim to extract about 90% or more of the lithium from brines, compared to about 50% using ponds.
No one has launched a commercial DLE operation without ponds, although multiple companies are racing to be first.
Arcadium, through a predecessor company, was the first to develop an early version of a DLE technology in the 1990s at an Argentina lithium brine site that is still operational today.
While that site uses ponds in tandem with DLE, Arcadium's decades-long experience with the technology makes it a tantalizing prize for Rio as it aims to develop lithium deposits in Chile, where officials are phasing out ponds and requiring DLE, and elsewhere.
"It (DLE) is actually the solution to provide the lithium that the world needs," Rio CEO Jakob Stausholm told investors on Wednesday after announcing the all-cash deal. It values Arcadium at a 90% premium to its share price before Reuters first reported the companies were in talks last Friday.
Arcadium's Argentina DLE operations are located near a DLE project that Rio paid $825 million for in 2022, though that project has yet to produce lithium. Arcadium's engineers have already met with Rio's DLE team, Stausholm said.
"There's a lot ahead of us and we haven't explored it fully, yet it's the right technology," he said.
Though Rio has long been a leader in hard rock mining, it has far less expertise in the chemical processing at the core of lithium production.
DLE, for example, is just one part of a complex process that can involve more than 20 steps, including pre-treatment of a lithium brine and crystallization.
Each brine deposit can also have different chemical compositions - including various levels of calcium, magnesium and other metals - that must be carefully analyzed. All of those steps have been studied in depth for years by Arcadium.
"The key to unlocking initial implementation of DLE tends to be that know-how plus infrastructure," Arcadium CEO Paul Graves told investors on Wednesday. "But once you have unlocked it, it's incredibly quickly replicable."
Arcadium, through a predecessor company, also holds a stake in EnergySource Minerals, a DLE developer that licenses lithium technology to SLB SLB.N and others. When that investment was announced last December, executives said it could start commercial production by 2025.
"Rio Tinto is paying a premium for Arcadium in part for its intellectual property around DLE technology," said Chris Berry, an independent lithium industry consultant.
DLE RIVALS
Rio's bid to make DLE mainstream will face intense competition, including from some of the very people who helped make Arcadium a DLE leader.
Arcadium's Argentina DLE site, for example, was developed by a scientist who is now chairman of International Battery Metals IBAT.CD, which has developed a modular DLE facility that Exxon, Chevron CVX.N and others have considered licensing.
Albemarle, the world's largest lithium producer, is also testing DLE in Arkansas near its existing bromine operations and in Chile. SQM, which is headquartered in Santiago, agreed with Chile's government this year to a plan that will see its production increase in part due to DLE.
"DLE is about being a chemical processing expert. Companies like Arcadium, Albemarle, SQM, they have a lot of expertise that they can put to work in that area," Eric Norris, head of Albemarle's energy storage business and a former executive at an Arcadium predecessor company, told Reuters earlier this year.
Vulcan Energy VUL.AX, privately held EnergyX, Standard Lithium SLI.V and others are also advancing their own versions of DLE technologies.
BREAKINGVIEWS-Rio’s $6.7 bln lithium bet is a pricey slow burn nL8N3LL0G5
Rio Tinto goes all in on lithium with $6.7 bln Arcadium buy nL4N3LL0HL
FACTBOX-Arcadium deal to vault Rio Tinto into lithium supplier big league nL4N3LL0RH
TIMELINE-Owners of Arcadium's lithium assets through the years nL1N3LJ0OI
Reporting by Ernest Scheyder and Clara Denina; Editing by Veronica Brown and Jamie Freed
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دستبرداری: XM Group کے ادارے ہماری آن لائن تجارت کی سہولت تک صرف عملدرآمد کی خدمت اور رسائی مہیا کرتے ہیں، کسی شخص کو ویب سائٹ پر یا اس کے ذریعے دستیاب کانٹینٹ کو دیکھنے اور/یا استعمال کرنے کی اجازت دیتا ہے، اس پر تبدیل یا توسیع کا ارادہ نہیں ہے ، اور نہ ہی یہ تبدیل ہوتا ہے یا اس پر وسعت کریں۔ اس طرح کی رسائی اور استعمال ہمیشہ مشروط ہوتا ہے: (i) شرائط و ضوابط؛ (ii) خطرہ انتباہات؛ اور (iii) مکمل دستبرداری۔ لہذا اس طرح کے مواد کو عام معلومات سے زیادہ کے طور پر فراہم کیا جاتا ہے۔ خاص طور پر، براہ کرم آگاہ رہیں کہ ہماری آن لائن تجارت کی سہولت کے مندرجات نہ تو کوئی درخواست ہے، اور نہ ہی فنانشل مارکیٹ میں کوئی لین دین داخل کرنے کی پیش کش ہے۔ کسی بھی فنانشل مارکیٹ میں تجارت میں آپ کے سرمائے کے لئے ایک خاص سطح کا خطرہ ہوتا ہے۔
ہماری آن لائن تجارتی سہولت پر شائع ہونے والے تمام مٹیریل کا مقصد صرف تعلیمی/معلوماتی مقاصد کے لئے ہے، اور اس میں شامل نہیں ہے — اور نہ ہی اسے فنانشل، سرمایہ کاری ٹیکس یا تجارتی مشورے اور سفارشات؛ یا ہماری تجارتی قیمتوں کا ریکارڈ؛ یا کسی بھی فنانشل انسٹرومنٹ میں لین دین کی پیشکش؛ یا اسکے لئے مانگ؛ یا غیر متنازعہ مالی تشہیرات پر مشتمل سمجھا جانا چاہئے۔
کوئی تھرڈ پارٹی کانٹینٹ، نیز XM کے ذریعہ تیار کردہ کانٹینٹ، جیسے: راۓ، خبریں، تحقیق، تجزیہ، قیمتیں اور دیگر معلومات یا اس ویب سائٹ پر مشتمل تھرڈ پارٹی کے سائٹس کے لنکس کو "جیسے ہے" کی بنیاد پر فراہم کیا جاتا ہے، عام مارکیٹ کی تفسیر کے طور پر، اور سرمایہ کاری کے مشورے کو تشکیل نہ دیں۔ اس حد تک کہ کسی بھی کانٹینٹ کو سرمایہ کاری کی تحقیقات کے طور پر سمجھا جاتا ہے، آپ کو نوٹ کرنا اور قبول کرنا ہوگا کہ یہ کانٹینٹ سرمایہ کاری کی تحقیق کی آزادی کو فروغ دینے کے لئے ڈیزائن کردہ قانونی تقاضوں کے مطابق نہیں ہے اور تیار نہیں کیا گیا ہے، اسی طرح، اس پر غور کیا جائے گا بطور متعلقہ قوانین اور ضوابط کے تحت مارکیٹنگ مواصلات۔ براہ کرم یقینی بنائیں کہ آپ غیر آزاد سرمایہ کاری سے متعلق ہماری اطلاع کو پڑھ اور سمجھ چکے ہیں۔ مذکورہ بالا معلومات کے بارے میں تحقیق اور رسک وارننگ ، جس تک رسائی یہاں حاصل کی جا سکتی ہے۔
