Rio Tinto to buy lithium project in Argentina for US$825M

Rio Tinto (NYSE: RIO; LSE: RIO; ASX: RIO) is expanding its lithium ambitions beyond the Jadar project in Serbia by agreeing to buy the Rincon brine project, located in the heart of the lithium triangle in Argentina’s Salta province.

The world’s second-largest miner said the US$825 million acquisition demonstrates its commitment to build its battery materials business and strengthens its portfolio for the global energy transition.

The deal comes as analysts warn of an imminent and “significant” supply gap for lithium, driven by booming demand for the metal used in electric vehicles (EV) and green technologies.

Rincon is a large undeveloped lithium brine project that will use a direct, low-cost extraction technology that has the “potential to significantly increase lithium recoveries” compared to solar evaporation ponds, Rio Tinto said in a news release, adding that a pilot plant was currently running at the site.

According to Rincon Mining, which has developed the project and technology since 2009, the novel extraction method allows obtaining the battery metal from raw brine in under 24 hours.

The project, Rio Tinto said, has the potential to have one of the lowest carbon footprints in the industry that can help deliver on the company’s commitment to decarbonise its portfolio.

Rio Tinto said that market fundamentals for battery grade lithium carbonate are strong, with lithium demand forecast to grow 25-35% a year over the next decade. And EV sales are on track to hit up to 55% of the world’s total light vehicles sales as early as 2030, reaching about 65 million units. 

This means, Rio Tinto has said, that manufacturers would need about three million tonnes of lithium, compared with the roughly 350,000 tonnes they consume today. Existing operations and projects combined, however, are slated to contribute one million tonnes of lithium, the miner has noted. 

Rio Tinto estimates that committed supply and capacity expansions will contribute only about 15% to demand growth over the 2020-2050 period. The remaining 85% would need to come from new projects. 

“Filling the supply gap will require over 60 Jadar projects,” the company’s head of economics Vivek Tulpule said in October.

“This acquisition is strongly aligned with our strategy to prioritise growth capital in commodities that support decarbonization,” CEO Jakob Stausholm said in the statement. “The Rincon project holds the potential to deliver a significant new supply of battery-grade lithium carbonate, to capture the opportunity offered by the rising demand driven by the global energy transition.”

In July, Rio Tinto committed US$2.4 billion to its Jadar lithium project in Serbia, which has ignited protests by environmentalists over alleged water and land pollution the mine would generate. 

Last year, the mining giant allegedly attempted to buy a US$5 billion stake in Chile’s Chemical and Mining Society (SQM), the world’s second-largest lithium producer.

The investment would have given Rio Tinto a foothold in the booming battery metals sector, though it already holds key copper assets and the red metal is also used in EVs.