Rio's Arcadium Lithium acquisition: A positive outlook for cross-border critical minerals deals

Transactions involving critical minerals assets are facing increased scrutiny from governments and foreign investment regulators due to the growing priority of securing reliable access to critical minerals, largely stemming from increased demand of those minerals as part of the energy transition.

In this article, we consider the timing of the conditions precedent to Rio Tinto’s acquisition of Arcadium Lithium. Specifically, given Arcadium’s portfolio of assets across multiple jurisdictions, we consider the timing of the merger control and investment screening approvals for the Transaction, which completed on 5 March 2025.

Background

On 9 October 2024, Rio Tinto, through its subsidiaries Rio Tinto Western Holdings Limited and Rio Tinto BM Subsidiary Limited (private limited companies incorporated under the laws of England & Wales) (Rio) announced it would acquire Arcadium Lithium Plc, a public limited company incorporated under the laws of the Bailiwick of Jersey (Arcadium) pursuant to a scheme of arrangement under the Companies (Jersey) Law 1991.

Rio acquired Arcadium in an all-cash transaction for US$5.85 per share (the Transaction). This represents a 90% premium to Arcadium’s closing price of $3.08 per share on 4 October 2024 and values Arcadium’s diluted share capital at approximately US$6.7 billion.

The Transaction sees Rio acquire all of Arcadium’s portfolio of operating lithium assets and development projects, giving Rio control of about 5% of the world's lithium supply and making it the third largest lithium supplier, only behind Albemarle and Sociedad Química y Minera de Chile S.A. (SQM). This counter-cyclical transaction comes as lithium spot prices are down more than 80% from peak prices, highlighting Rio’s confidence in the long-term outlook for lithium.

The assets and projects

Arcadium’s portfolio of assets and projects include:

• Lithium carbonate production facilities in Argentina, including the Salar del Hombre Muerto site (wholly owned by Arcadium) and the Olaroz site (Arcadium holds a 66.5% interest). Additionally, Arcadium is undertaking pre-development of the wholly-owned Cauchari lithium brining facility.
• Lithium hydroxide production assets in the United States, Japan, and China, all fed by internally produced lithium carbonate. These include the Bessemer City lithium hydroxide production asset in the United States (wholly owned by Arcadium), the Rugao and Zhejiang assets in China, the Nemaska Lithium asset in Canada (Arcadium holds a 50% interest with the remaining 50% held by an investment arm of the Quebec government), and the Naraha asset in Japan (a joint venture with Toyota Tsusho Corporation in which Arcadium holds a 75% interest).
• Spodumene assets at Mt Cattlin in Western Australia and Galaxy in Quebec, Canada (wholly-owned assets), as well as the Whabouchi mine at the Nemaska Lithium asset in Quebec, Canada (Arcadium holds a 50% interest with the remaining 50% held by an investment arm of the Quebec government).
• Wholly-owned Butyllithium assets in the United States, United Kingdom, and China.
• Additional assets in the United States, including a lithium metal, specialty organics, and various inorganic products facility, and a Liovix printable lithium technology asset.

Conditions precedent to the Transaction

Completion of the Transaction was subject to certain conditions precedent which were required to be satisfied or waived, being:

• Arcadium shareholder approval: The scheme of arrangement required the approval by 75% of the voting rights of Arcadium’s shareholders.
• Court sanction: The scheme of arrangement was required to have been sanctioned by the Royal Court of Jersey and a copy of the court order delivered to the Registrar of Companies in Jersey.
• No legal prohibitions: There must have been no law or order of a competent jurisdiction restraining, enjoining, or otherwise prohibiting the consummation of the Transaction.
• Regulatory approvals: All consents required under the antitrust laws and investment screening laws of the jurisdictions must have been obtained, and any applicable waiting period must have expired or been terminated.

On 23 December 2024, Arcadium announced that it had obtained all requisite shareholder approvals in connection with the Transaction. On 6 March 2025, the Transaction was sanctioned by the Royal Court of Jersey.

The regulatory approvals

On 13 February 2025, Arcadium announced that it had obtained all pre-completion regulatory approvals in connection with the Transaction. The merger control approvals and investment screening approvals took, in total, just over four months to obtain.

Merger control approval, or antitrust approval, is a regulatory process that ensures mergers, acquisitions, and other business practices do not harm competition in the market. This process is governed by antitrust laws, which are designed to prevent monopolies and promote fair competition. For this Transaction, antitrust approvals were required to be satisfied or waived in Australia, Canada, China, Japan, South Korea, the UK, and the US.

An investment screening approval is a regulatory process that evaluates foreign investments to ensure they do not pose risks to national security, public order, or other critical interests of a country. This process is particularly important for investments in sensitive sectors such as critical minerals, defense, technology, and infrastructure. For this Transaction, investment screening approvals were required in Australia, Canada, Italy, Ireland, the UK, and the US.

Timeline of the regulatory approvals

Noting that the outcome of the merger control and investment screening applications are typically confidential in nature, the timelines for a Transaction of this complexity suggest that the parties achieved the relevant approvals in an expedient timeframe.

Arcadium provided updates to investors and stakeholders on the progress of the various merger control and investment screening applications. These updates did not include the exact dates when required approvals were either satisfied or waived, making it challenging to determine with certainty the timeline for approval from certain regulators and government bodies. However, on 23 December 2024, Arcadium announced that merger control clearance was satisfied or waived in Australia, Canada, China, the United Kingdom, and the United States, and investment screening approval had been satisfied in the United Kingdom.

Following that, on 8 January 2025, Arcadium announced that merger control clearance in Japan and South Korea had been satisfied or waived. Arcadium was therefore able to secure merger control clearance from all required jurisdictions within 91 days from the announcement of the Transaction.

Additionally, on 8 January 2025, Arcadium announced that the Committee on Foreign Investment in the United States had concluded its review of the Transaction and determined there were no unresolved national security concerns.

In completion of the regulatory approvals, on 13 February 2025, Arcadium announced that it had received all required investment screening approvals in Australia, Canada, Italy, the United Kingdom, and the United States. All required investment screening approvals were received 127 days from the announcement of the Transaction.

Conclusion

Rio Tinto and Arcadium satisfied merger control and investment screening conditions in just over four months from the announcement of the Transaction. This successful outcome should provide reassurance to companies and investors that parties can achieve expedient approval timelines for complex, cross-border critical minerals transactions, notwithstanding the current increased regulatory scrutiny facing critical minerals transactions.

Clients in a similar position should consider several key factors and address potential pain points when navigating critical minerals transactions:

1. Regulatory scrutiny: Transactions involving critical minerals are subject to increased scrutiny from governments and foreign investment regulators. Clients should be prepared for thorough reviews and ensure compliance with all relevant regulations to avoid delays or complications.
2. Timing of approvals: The timing of merger control and investment screening approvals is crucial. Clients should plan for these processes to take several months and factor this into their transaction timelines. It's important to stay informed about the progress of these approvals and maintain open communication with regulatory bodies.
3. Jurisdictional challenges: Given the global nature of critical minerals assets, clients must navigate regulatory requirements across multiple jurisdictions. This can be complex and time-consuming, so having a clear understanding of the specific requirements in each jurisdiction is essential.
4. Market conditions: The critical minerals market can be volatile, with prices fluctuating significantly. Clients should consider the long-term outlook for the minerals they are investing in and be prepared for potential market downturns. Confidence in the long-term value of the assets is key.
5. Stakeholder communication: Keeping investors and stakeholders informed about the progress of the transaction and regulatory approvals is important. Regular updates can help manage expectations and build confidence in the transaction's success.
6. Legal and financial expertise: Engaging experienced legal and financial advisors who specialise in cross-border transactions and critical minerals can provide valuable insights and help navigate the complexities of these deals. Their expertise can be instrumental in ensuring a smooth transaction process.

If you're looking to explore opportunities in the critical minerals sector or need expert guidance on cross-border deals, our team is here to help.