Arcadium Lithium (ASX:LTM) has been confirmed as a desired takeover target of mining behemoth Rio Tinto (ASX:RIO).
Rio Tinto itself released an announcement on Monday morning, confirming it had “made an approach to Arcadium Lithium regarding a potential acquisition.”
Rio was quick to point out the approach doesn’t actually guarantee anything, adding it would not make further comment lest appropriate.
HotCopper users were quick to piece together the story in the background.
Last month, Arcadium mothballed its lithium mine as low prices for the battery metal continue to drop projects all around the market like flies. Some lithium explorers have turned to other minerals, many others have sold out. The days of early-2020’s, COVID-era lithium prices are behind us.
Now, Rio Tinto – a far larger company with far more capital – is swimming circles around Arcadium, with the latter company between a rock and a hard place.
Either it can sell to Rio for what shareholders hope will be a decent offer, or continue on its own way, presumably towards a Bad Ending for the company and its investors.
Rio Tinto, of course, picks up a near-ready fleshed out lithium project in WA which it could start mining now, or, when prices recover in what is predicted by Benchmark Minerals Intelligence to be around 2028.
The news, as far as Arcadium management goes, isn’t necessarily welcome – big movements in M&A are often a story of a winner and a loser.
Whether we see 2022-era highs ever again remains to be seen (though, there’s a lot more supply in the world now, per the Pork Cycle.)
One user – with the memorable username ProCapitalism – pondered whether monitoring short positions could lend clues to traders.
“Let’s see how the shorts react over the coming days & weeks. My assumption is they’ll start to close out their positions if this is really going to happen,” they wrote.
When it comes to short sellers, user Tt2000 was more direct.
“Anyone feel sorry for these shorts this morning? I don’t … watch those rats scramble,” they commented.
LTM last traded at $4.18.
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