Rio Tinto (ASX, LON, NYSE: RIO) is expanding its lithium ambitions beyond the Jadar project in Serbia by , located in the heart of the lithium triangle in Argentina鈥檚 Salta Province.
The $825 million acquisition comes as analysts warn of an imminent and聽鈥渟ignificant鈥� supply gap for lithium,聽driven by booming聽demand聽for the metal used in聽electric vehicles聽(EV)聽and green technologies.
The world鈥檚 second-largest miner said the deal demonstrates its commitment to build its battery materials business and strengthens its portfolio for the global energy transition.
Rincon is a large undeveloped lithium brine project that will use a direct, low-cost extraction technology that has the 鈥減otential to significantly increase lithium recoveries鈥� compared to solar evaporation ponds, Rio said, 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 extracting the battery metal from raw brine .
The project, Rio said, has the potential to have one of the lowest carbon footprints in the industry that can help deliver on Rio鈥檚 commitment to decarbonise its portfolio.
The company said that market fundamentals for battery grade lithium carbonate are strong, with lithium demand forecasted to grow 25-35% a year over the next decade. 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, Rio has said, that manufacturers would need about three million聽tonnes聽of lithium, compared with the roughly 350,000聽tonnes聽they consume today. Existing operations and projects combined, however, are slated to contribute one million聽tonnes聽of lithium, the miner has noted.聽
Filling the gap
Rio Tinto estimates聽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.聽
鈥淔illing the聽supply gap will require over 60聽Jadar聽projects,鈥� the company鈥檚 head of economics聽Vivek Tulpule聽said in October.
鈥淭his acquisition is strongly aligned with our strategy to prioritise growth capital in commodities that support decarbonization,鈥� chief executive Jakob Stausholm聽. 鈥淭he 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.鈥�
Rio committed $2.4 billion in July to its Jadar lithium project in Serbia, which has ignited protests by environmentalists who claim the mine would cause water and land pollution.聽
The mining giant reportedly聽, the world鈥檚 second largest lithium producer.
The investment would have provided the Rio Tinto foothold in the booming battery metals sector, though it already holds key copper assets and the red metal is also used in EVs.