Rio Tinto (ASX, LON, NYSE: RIO)聽joined the rising chorus of companies and analysts warning of an imminent and聽鈥渟ignificant鈥� supply gap for lithium,聽as聽demand聽for the metal used in聽electric vehicles聽(EV)聽and green technologies聽continues to soar.聽
The world鈥檚 second-largest miner, which greenlighted聽听迟丑别听$2.4 billion聽Jadar聽lithium project聽in Serbia,聽believes the supply gap聽needs聽to聽be addressed 鈥渨ithin the next ten years.鈥澛犅�
In a聽, Rio Tinto鈥檚 head of economics聽Vivek Tulpule聽said EV聽sales are on track to hit聽up to聽55%聽of the world鈥檚 total light vehicles sales聽as early as 2030, reaching聽about聽65 million units.聽
This means manufacturers would need about three million聽tonnes聽of lithium, compared with the roughly 350,000聽tonnes聽they consume today,聽Tulpule noted.聽
Existing operations and projects combined, however, are slated to contribute one million聽tonnes聽of lithium, he said.聽
Rio Tinto estimates聽that committed supply and capacity expansions will contribute about 15% to demand growth over the 2020-2050 period. The remaining 85% would need to come from new projects.聽
鈥淔illing the聽supply gap will require over 60聽Jadar聽projects,鈥� he warned.聽
Jadar, located聽in western Serbia,聽would produce enough lithium to power one million electric vehicles,聽Rio has said. It will also produce boric acid, used in ceramics and batteries, and sodium sulphate, used in detergents.聽
Mine construction is expected to begin early next year, subject to environmental approvals, with the first production in 2026.聽Following ramp up to full production in 2029, the聽Jadar聽mine will produce 58,000 tonnes of lithium carbonate, 160,000 tonnes of boric acid and 255,000 tonnes of sodium sulphate a year.聽
The聽company聽anticipates that recycling will take on a bigger role聽in the coming years but will only begin聽to make a relevant contribution after 2040 as vehicles that are currently being purchased are scrapped.聽
Rio Tinto聽believes聽lithium-ion聽batteries will be the preferred storage technology for EVs,聽as well as聽important contributors to聽the setting of a聽renewable grid.聽
鈥淓xpected future development of solid-state batteries with improved energy density and safety performance could provide further upside, by increasing lithium intensity per kilowatt by over 30%,鈥� Tulpule said.聽
Expanding footprint
Over the past five years, the miner has聽tried to expand its footprint聽in聽the battery market.聽In 2018, Rio reportedly聽, the world鈥檚 second largest lithium producer.聽
In April this year, it聽kicked off lithium production聽from waste rock聽at a聽demonstration聽plant located at a聽borates聽mine it controls in California.聽
Rio invested $10 million to build the pilot plant that will be able to produce 10 tonnes a year of lithium-carbonate. By the end of the year, and based on the trial鈥檚 results, it will decide聽whether or not聽to spend a further $50 million in an industrial-scale plant with annual capacity of 5,000 tonnes a year 鈥� enough for around 15,000 Tesla Model S batteries.聽
The projected production would be roughly the same as the capacity of Albemarle聽鈥檚 Silver Peak mine in Nevada, which is currently the only lithium-carbonate producing asset in the country, according to the US Geological Survey.聽