ASX 200 Lithium Stock in Talks for Possible Deal with Rio Tinto

The company IGO Ltd has emerged as an unexpected player in potential negotiations involving a Rio Tinto Ltd asset. This development is intriguing for investors following both companies and is noteworthy for those tracking ASX-listed lithium stocks.

IGO Ltd's (ASX:IGO) Expanding Portfolio

IGO Ltd is known for its focus on commodities essential to the clean energy transitionThe company currently holds a 49% stake in Tianqi Lithium Energy Australia (TLEA), a joint venture with Tianqi Lithium CorporationTLEA is a significant player in the lithium sector, owning 51% of the Greenbushes lithium operation and 100% of the Kwinana Lithium Hydroxide Refinery in Western Australia.

In addition to its lithium interests, IGO operates the Nova nickel operation in Western AustraliaAs part of its growth strategy, IGO is exploring opportunities to broaden its asset base.

Speculation Surrounding Rio Tinto (ASX:RIO) Asset

Recent reports from The Australian suggest that IGO is considering acquiring one of Rio Tinto’s assets in Western AustraliaNotably, the asset in question is not related to lithiumThe speculation centers on the Winu copper-gold project, located approximately 320km east of Port Hedland in the Pilbara region.

Rio Tinto has deemed the Winu project as “sub-scale,” which might explain its willingness to part with the assetThe project is situated on land associated with the Aboriginal Nyangumarta and Martu people’s Native Title Determination Areas, with Rio Tinto having lodged an application with the Western Australian government to develop it.

Strategic Benefits for IGO Ltd

IGO’s interest in the Winu project aligns with its strategy to diversify its portfolioThe company recently highlighted its need to focus on acquisitions, particularly following the challenging experience with the purchase of nickel miner Western AreasThe decline in nickel prices, partly due to increased supply from Indonesia, has put pressure on IGO's nickel operations.

Diversification could provide a hedge against potential slowdowns in lithium demand, especially if the adoption of electric vehicles progresses slower than anticipatedAcquiring an established copper project like Winu could offer IGO a more immediate growth opportunity compared to the lengthy process of developing a new deposit.

Analyst Perspectives on IGO Shares

Over the past year, IGO’s share price has experienced a notable decline of approximately 60%Despite this, there are mixed opinions from analysts on the stock’s future potentialCurrently, there are nine positive ratings, six neutral ratings, and four negative ratings for IGO shares.

The average target price from these analyst evaluations is $6.17, suggesting a potential 19% increase from the current share priceThis outlook reflects optimism about IGO's ability to navigate current challenges and leverage new opportunities effectively.

IGO Ltd appears to be exploring significant strategic moves, including a possible acquisition of a Rio Tinto Ltd assetThis potential deal could provide IGO with valuable diversification and growth opportunitiesAs the situation develops, monitoring IGO’s strategies and market performance will be crucial for investors evaluating the company’s future prospects.