SMM survey: what kind of metal do you like most in 2022?
Rio (ASX, LON, NYSE: RIO) agreed to buy the Rincon brine project in the heart of the lithium triangle in Argentina's Salta province, extending its lithium mine ambitions beyond the Jadar project in Serbia.
The $825 million acquisition comes as analysts warn of an imminent and "significant" shortfall in the supply of lithium, driven by strong demand for metals used in (EV) and green technologies for electric vehicles.
The world's second-largest mining company said the deal demonstrated its commitment to building a battery materials business and strengthening its portfolio in the global energy transformation.
Rio Tinto said Rincon was a large undeveloped lithium brine project that would use direct, low-cost extraction technology that had "the potential to significantly improve lithium recovery" compared with solar evaporation pools, adding that a pilot plant was currently running at the site.
Rincon Mining, which has been developing the project and technology since 2009, says the new extraction method can extract battery metal from raw brine within 24 hours.
Rio Tinto said the project had the potential to become one of the lowest carbon footprints in the industry, helping to meet Rio's commitment to decarbonization of its portfolio.
The company says the fundamentals of the market for battery-grade lithium carbonate are strong and that demand for lithium is expected to grow at an annual rate of 25 per cent and 35 per cent over the next decade. Electric vehicle sales are expected to reach 55% of global light vehicle sales, or about 65 million units, by 2030.
Rio Tinto said this meant that manufacturers would need about 3 million tonnes of lithium, compared with their current consumption of about 350000 tonnes. However, combined with existing operations and projects, it is expected to contribute 1 million tons of lithium.
Rio estimates that promised supply and capacity expansion will contribute only about 15 per cent to demand growth between 2020 and 2050. The remaining 85% will need to come from new projects.
"filling the supply gap will require more than 60 Jadar projects," Vivek Tulpule, the company's economic director, said in October.
CEO Jakob Stausholm said in a statement: "this acquisition is highly consistent with our strategy to give priority to growth capital to support decarbonized commodities. The Rincon project has the potential to provide a large number of new battery-grade lithium carbonate supplies to seize the opportunities offered by the growing demand driven by the global energy transformation. "
Rio Tinto pledged $2.4 billion in July to invest $2.4 billion in its Jadar lithium mine in Serbia, which sparked protests from environmentalists who claimed the mine would pollute water and land.
The mining giant is reported to be trying to buy a $5 billion stake in the Chilean Chemical and Mining Association, the world's second-largest lithium producer, in 2018.
The investment will give Rio a foothold in the booming battery metal industry, even though it already has key copper assets and the red metal is also used in electric cars.
