The global lithium market is abuzz with Rio Tinto's acquisition of Arcadium Lithium for a record amount, a move that could reshape the landscape for lithium producers. Additionally, a new player may enter the copper market, while significant changes loom for the aluminium and zinc sectors.
TotalEnergies Eyes Entry into Copper Market
French oil and gas giant TotalEnergies is considering expanding into copper trading, according to Rahim Azouni, senior vice president of TotalEnergies, who addressed employees at a closed conference. The interest in copper comes amid forecasts of a potential long-term shortage, driven by declining deposits and limited new sites, alongside increasing demand for renewable energy, electric vehicles, and AI development.
It remains unclear whether TotalEnergies will focus solely on trading or also engage in mining and processing. If the current trajectory continues, the company may start with trading and later expand into mining, similar to the strategy of other oil giants exploring lithium opportunities.
Rio Tinto to Acquire Arcadium Lithium
Rio Tinto has agreed to acquire Arcadium Lithium for $6.7 billion, significantly boosting its presence in the lithium market. Rio Tinto currently has lithium projects in Argentina (Rincon) and Serbia (Jadar). The addition of Arcadium Lithium’s operations across Australia, Canada, the US, and Argentina is expected to propel Rio Tinto to a leading position, accounting for about 10% of global lithium supply by 2030. This would place Rio Tinto among the top players, alongside Albemarle and SQM.
The long-term outlook for lithium remains optimistic, with rising demand driven by the growth of electric vehicles and energy storage solutions. Analysts predict that production from Arcadium Lithium’s assets could increase by 78% over the next three years. If the acquisition is finalized, Rio Tinto may decide to suspend the controversial Jadar project in Serbia, which has faced significant environmental protests.
Rusal to Double Boguchansk Aluminium Smelter Capacity
Rusal plans to begin construction of the second phase of the Boguchansk aluminium smelter (BoAZ) next year, aiming to double its capacity to 600,000 tonnes by 2030. The estimated investment requirements will be determined by the end of 2024.
The first phase of BoAZ, with a capacity of 298,000 tonnes per year, was commissioned in 2019 with investments totaling $1.7 billion. It was financed jointly by Rusal and RusHydro, partners in the Boguchansk Energy and Metallurgical Association, which includes BoAZ and the Boguchansk Hydroelectric Power Plant.
Rusal also financed the first phase of the Taishet aluminium smelter (TAZ), with a capacity of 428,500 tonnes per year, commissioned in late 2021. Plans to expand TAZ to 540,000 tonnes have been put on hold, contingent on the progress of BoAZ’s capacity expansion.
In 2023, Rusal produced approximately 3.9 million tonnes of aluminium, with sales totaling 4.153 million tonnes, aided by the sale of excess inventory from 2022.
Japanese Buyers to Pay Higher Premiums for Aluminium
Japanese buyers have agreed to a premium of $175 per tonne for primary aluminium shipments from key producers in the final quarter of 2024, a 1.7% increase over the previous quarter but slightly below the range of $180-185 per tonne previously offered by Western suppliers.
Japan, a major importer of primary aluminium, determines its quarterly premiums based on London Metal Exchange quotations. In 2023, Japan’s aluminium imports fell by 26% to 1.03 million tonnes, their lowest level since 1986, due to declining demand from the construction and automotive sectors.
Japan remains a leading producer of secondary aluminium, with annual output exceeding 1 million tonnes, and also exports significant volumes of aluminium semi-finished products globally, including to China.
Korea Zinc Caught in Corporate Battle
Korea Zinc, a leading global zinc producer, is embroiled in a corporate conflict involving major shareholders and top management. MBK Partners, a private equity firm allied with members of the Chang family (who also control competitor Young Poong), is attempting a takeover of Korea Zinc, which has been managed by the Choi family since its founding in 1974. The Choi family is backed by Bain Capital, co-owner of Burger King.
MBK Partners seeks to become the main shareholder of Korea Zinc by acquiring shares held by Young Poong. However, this is strongly opposed by the Choi family. Korea Zinc has consistently performed well financially, while Young Poong has faced significant issues, including allegations of employee safety violations and potential environmental sanctions that could shut down operations at the Seokpo smelter.
Tensions have escalated over Korea Zinc’s refusal to process sulphuric acid generated at Seokpo, arguing it should be handled by Young Poong directly due to high storage and transportation costs. Young Poong claims this violates a long-standing agreement, jeopardizing Seokpo’s viability.
The outcome of this conflict remains uncertain, casting doubt on Korea Zinc’s future. Plans to diversify into nickel production—from 22,000 tonnes to 65,000 tonnes annually—could also be jeopardized. As part of its strategy, Korea Zinc recently acquired US-based Kataman Metals for $55 million, specializing in non-ferrous metal scrap processing. Kataman Metals trades approximately 300,000 tonnes of scrap annually, focusing on aluminium and copper, with revenues of around $1.5 billion.
The acquisition is strategically important as Korea Zinc looks to expand its copper operations at Onsan, which will require up to 130,000 tonnes of scrap copper annually once the expansion is completed in the first half of 2025.
