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Allkem share price pops amid Rio Tinto takeover rumours

The ASX lithium share is having a top run today.

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Monica O'Shea
Monica is a journalist with experience working for Daily Mail Australia in Sydney and the Port Pirie Recorder and the Flinders News in South Australia. Monica completed a journalism cadetship in 2013. She also hold a B.Science (Biotechnology) with Honours from the University of Adelaide. Monica has worked in government at the local, state and federal level. Monica has a keen interest in finance and the share market and enjoys exploring the highs and lows. When not writing for Motley Fool Australia, Monica enjoys travel, sport, music, and likes to play the violin in her spare time.
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Key points
  • Allkem shares are in the green today, up 3%  
  • Rio Tinto could be looking at a lithium acquisition, and Allkem may be a possible target, media reports suggest 
  • Multiple lithium shares are sliding on the market today 

The Allkem Ltd (ASX: AKE) share price is having a top run on the market today.

Allkem shares are rising 3.27% and currently fetching $11.70. In contrast, the S&P/ASX 200 Materials Index (ASX: XMJ) is sliding 0.05% today.

Let's take a look at what is going on at Allkem.

A miner in a hardhat makes a sale on his tablet in the field.

Image source: Getty Images

What's going on?

Allkem is outperforming multiple ASX lithium shares on the market today. For example, Core Lithium Ltd (ASX: CXO) shares are sliding 1.01%, Lake Resources N.L. (ASX: LKE) shares are shedding 2.94% and Sayona Mining Ltd (ASX: SYA) shares are down 3.75%. Pilbara Minerals Ltd (ASX: PLS) shares are rising 1.01%,

News has emerged that Allkem could be a potential takeover target for ASX 200 mining giant Rio Tinto Ltd (ASX: RIO).

A source told The Australian Rio Tinto "could make a play" for Allkem. Now could be a good time for Rio to pounce, according to the source, given the lower lithium prices.

Allkem produces lithium at the Olaroz Lithium project in Argentina. The company also produces spodumene concentrate from the Mt Cattlin project in Ravensthorpe, Western Australia.

Rio Tino also has operations in Argentina and Western Australia. The company acquired the Rincon lithium project in Argentina in 2022 for $825 million.

In a quarterly report last week, Allkem reported a 38% boost in lithium production at the Olaroz lithium facility to 4,102 tonnes. At Mt Cattlin, 21,533 dry metric tonnes (dmt) of spodumene concentrate was shipped, up from 15,702 dmt in the December quarter.

The team at Morgans has recently maintained an "add" rating on the Allkem share price with a lower price target of $14.70.

Goldman has also recommended the Allkem share price as a buy and placed a $12.90 price target on the company's share price. Analysts said:

Allkem has one of the best production outlooks in our lithium coverage, with broad-based growth optionality, second only to Mineral Resources on an LCE basis when including downstream hydroxide production on an equity basis.

Allkem share price snapshot

The Allkem share price has shed 2.5% in the last year.

Allkem has a market capitalisation of about $7.46 billion based on the current share price.

Motley Fool contributor Monica O'Shea has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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