Rio Tinto (RIO.US) confirms it has made a $3.3 billion offer for Arcadium Lithium (ALTM.US)

Global miner Rio Tinto (RIO.US) has confirmed it has made a non-binding offer to buy Arcadium Lithium (ALTM.US), the world's second-largest mining company said in a statement on Monday. It is unclear whether any deal will be struck with the US miner, which is valued at about $3.3bn.

Global lithium inventories have been weak since the start of this year, as prices for the key battery metal have collapsed amid a supply glut and a slowdown in demand from electric vehicle makers. Arcadium Lithium has lagged its peers, sparking months of speculation about a takeover.

Citi had previously recommended Rio Tinto buy Arcadium Lithium in July. Citi analyst Paul Taggart wrote at the time that the miner's shares were "well below replacement value" and that the cost of buying Arcadium would be lower than building a new portfolio of high-quality lithium assets. "Buying Arcadium may be cheaper than trying to find and develop a chemical capability for those seeking scale, cost (brine) and chemistry expertise," Taggart said.

Any deal would need to be approved by Arcadium Lithium's board and shareholders. Tim Riordan and Michael Teran, portfolio managers at Blackwattle Investment Partners, wrote in a letter to the board of Arcadium Lithium on Saturday that the potential acquisition would be highly speculative and would require a significant premium to achieve a fair valuation of the business. Blackwattle Investment Partners is an investor in Arcadium Lithium.

Riordan and Teran wrote that the timing of the potential sale was "most destructive" for shareholders. They added that the global lithium market appeared to have bottomed out, and any sale price should be close to $8bn.