Rio Tinto Share Price Prediction: Upside Resumes As Market Digests Arcadium Lithium Acquisition

Summary:
• Rio Tinto share price has fresh momentum following its acquisition of Arcadium Lithium this week. We discuss how this could play out.

Mining giant Rio Tinto’s share price continued its recovery on Friday, rising by 0.8 percent to trade at GBX 5110 at the time of writing. The company’s stock has recently received fresh volatility following news of its acquisition of Arcadium Lithium. Rio Tinto (LSE: RIO) announced the $6.7 billion deal on Wednesday, with its stock price initially going downward.

Some investors are concerned that the demand for lithium hasn’t picked up as previously thought, meaning that the Arcadium Lithium takeover could take some time to yield positive ROI. The transition to renewable energy is expected to spur the demand for lithium, a key component in the manufacture of batteries used in electric vehicles (EVs). The material is also user on the manufacture of batteries used in laptops, phones and other electric equipment.

Despite the skepticism surrounding the acquisition, Rio Tinto’s entry into the lithium big league makes economic sense. It has acquired equipment, plants and mineral deposits that could boost its revenue significantly. In a key development, the Serbian parliament on Friday voted against a proposal to ban the mining of lithium and boron.

The move is a welcome development for Rio Tinto, as it clears the way for it to process with its multi-billion mining project in the country’s Jadar Valley. Discovered in 2004, the mine is home to one of the worl’d largest lithium deposits. However, it has faced scrutiny, opposition and even a ban in 2022 due to environmental concerns.

Rio Tinto share price continues to be under pressure as it trades at -13 percent year-to-date. However, recent gains have helped it break above the 20-Exponential Moving Average on the daily chart, signaling a potential accumulation for a sustained upside movement.

Rio Tinto share price prediction

The momentum on Rio Tinto share price signals that the buyers are in control. The stock pivots at 5,110, and the upside could encounter initial resistance at 5,146. However, a stronger bullish run could break above that barrier to test 5,178.

Conversely, moving below 5,110 will signal bearish momentum, which could find the first support at 5,086. If the sellers extend their control, it could break below that mark. That will invalidate the upside narrative and could clear the path to test 5,049.