Arcadium Lithium downgraded at HSBC after Rio Tinto's $6.7B bid (NYSE:ALTM)
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Oct 10 2024
0mins
Should l Buy RIO?
Source: SeekingAlpha
Analyst Downgrade: Arcadium Lithium (NYSE: ALTM) has been downgraded from Buy to Hold by HSBC analysts, citing that the company is fairly valued.
Acquisition Offer: The downgrade follows the approval of a $6.7 billion all-cash acquisition offer by the company's board.
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Analyst Views on RIO
Wall Street analysts forecast RIO stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for RIO is 83.70 USD with a low forecast of 68.00 USD and a high forecast of 129.50 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
6 Analyst Rating
2 Buy
4 Hold
0 Sell
Moderate Buy
Current: 93.410
Low
68.00
Averages
83.70
High
129.50
Current: 93.410
Low
68.00
Averages
83.70
High
129.50
About RIO
Rio Tinto plc is a United Kingdom-based mining and materials company. It operates in over 35 countries, and its portfolio includes iron ore, copper, aluminum and a range of other minerals and materials. Its segments include Iron Ore, Aluminum, Copper, and Minerals. The Iron Ore segment includes iron ore mining and salt and gypsum production in Western Australia. Its iron ore operations in Pilbara comprise an integrated network of over 18 iron ore mines and four independent port terminals. The Aluminum segment includes bauxite mining, alumina refining, and aluminum smelting and recycling. The Copper segment includes mining and refining of copper, gold, silver, molybdenum, other by-products and licensing of extraction technologies. The Minerals segment includes mining and processing of borates, diamonds, iron concentrate and pellets from the Iron Ore Company of Canada, lithium and titanium dioxide feedstock.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Tungsten Discovery: GoldHaven Resources confirmed tungsten mineralization at its Magno Property in British Columbia, with assays showing up to 6,550 ppm tungsten, validating historical data and expanding the known footprint, indicating the potential for a large mineral system with significant economic implications.
- Strategic Timing: China's export restrictions on tungsten have elevated its status as a critical mineral in North America and Europe, and GoldHaven's discovery in this context will enhance resource security for Western economies and promote domestic production capabilities.
- Multimetal Potential: The discovery of silver, lead, and zinc mineralization at Vines Lake, with silver grades reaching up to 2,370 g/t, further confirms the area's multimetal deposit potential, which could provide crucial support for future resource development.
- Drilling Program Progress: GoldHaven completed its inaugural drilling program at the Copeçal Gold Project in Brazil, discovering copper mineralization, suggesting the project could develop into a significant gold-copper system, thereby strengthening the company's resource base.
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- Strategic Investment: The U.S. has launched $30 billion in strategic financing in collaboration with 54 nations to counter China's export restrictions on tungsten, a move that will promote domestic production and position GoldHaven and its peers as essential pillars of the new industrial architecture.
- Multi-Metal Potential: The tungsten discovery at Vines Lake is accompanied by silver grades up to 2,370 grams per tonne and lead values exceeding 20%, indicating significant multi-metal potential in the area, which could lead to large-scale mineral discoveries and further enhance company value.
- Drilling Program Progress: GoldHaven completed its inaugural drilling program at the Copeçal Gold Project in Brazil, discovering copper mineralization that suggests the potential for a substantial gold-copper system, further solidifying the company's strategic positioning across multiple projects.
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- Current Control of Critical Minerals: China controls 60% to 90% of the global critical mineral processing market, particularly in missile defense and energy infrastructure, which creates vulnerabilities for the US and its allies, compelling them to take action to ensure supply security.
- US Policy Shift: President Trump launched the $12 billion Project Vault to stockpile critical minerals, while Congress passed the Critical Mineral Dominance Act, marking a significant step in breaking China's control over mineral supply chains and expected to boost domestic mining and refining sectors.
- Surge in Copper Demand: Copper demand is projected to rise by 50% to 42 million metric tons by 2040, while supply is expected to decline by 7%, leading to a 10 million ton shortfall, particularly driven by emerging technologies like AI and electric vehicles, intensifying the demand for copper.
See More
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- Negotiation Progress and Breakdown: Glencore and Rio Tinto began formal merger discussions in mid-December, with talks accelerating in January; however, negotiations collapsed on February 5 over valuation issues, as Glencore sought 40% ownership for its shareholders, which Rio deemed excessive, resulting in no agreement.
- Strategic Logic and Market Challenges: Although the merger appeared attractive on paper, Rio Tinto faces oversupply and falling prices in the iron ore market, while Glencore has seen a significant drop in copper output, and the merger could have addressed both companies' market exposure issues, but cultural and governance barriers proved insurmountable.
- Shareholder Structure and Governance Issues: Glencore was willing to cede CEO and chair roles to Rio Tinto, yet Rio's advisers tied the bid to share prices on the announcement day, which Glencore viewed as an arbitrary undervaluation of its copper assets, leading to another breakdown in talks.
- Future Outlook and Market Risks: Despite both sides being dismissive about renegotiating, the ongoing market challenges they face may keep the merger possibility alive; both Glencore and Rio Tinto are left grappling with unresolved market issues, particularly regarding the long-term outlook for copper and coal markets.
See More
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- Analysis of Layoff Trends: The report highlights that while high layoff numbers are typical in the first quarter, the unusually high total for January 2026 suggests that many of these plans were set at the end of 2025, reflecting employers' lack of confidence in the future.
- Fed Chair Nomination Insights: Trump stated that he would not have chosen Kevin Warsh as Fed chair if Warsh had indicated a desire to raise interest rates, showcasing his influence over monetary policy and confidence in his economic understanding.
- Rio Tinto and Glencore Merger Talks End: Rio Tinto announced it will no longer pursue an offer for Glencore after determining it could not reach a value-adding agreement, emphasizing the company's focus on long-term value, and under UK rules, it cannot approach Glencore again for at least six months.
See More
