Rio Tinto is set to acquire Arcadium Lithium for a whopping $9.9 billion.
👉 Background: Rio Tinto is the world’s second largest metals and mining company, behind the other Aussie company, BHP. It has over 23,000 people mining iron ore, bauxite, aluminium and copper.
👉 What happened: Rio Tinto has just dropped a wheelbarrow full of cash—$9.9 billion to be exact - to acquire Arcadium Lithium, the US-based lithium chemicals producer.
👉 What else: While lithium has been the hottest of hot metals over the past few years, over the past 18 months, it has been a 90% slump. But its CEO is backing in lithium over the long-term.
💡Be fearful when others are greedy and greedy when others are fearful - as Warren Buffett likes to say. This is the idea that the best time to buy good companies is when the market has assessed them too negatively based on short term factors.
💡Lithium has dropped by 90% in the past 18 months, but if you zoom out a little bit further, it’s still up by over 300% over the past 3 years. But the CEO of Rio Tinto is more focused on the average lithium price over the next decade rather than the next year.
💡Lithium is one of the key materials needed for electric vehicle batteries. And while the electric vehicle market has slowed down, it's still expected to grow at more than 6.6% each year across the world.
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