Rio Tinto Group’s recent announcement of a substantial $2.5 billion investment to expand its Rincon lithium project in Argentina aligns with President Javier Milei’s drive to deregulate the country’s economy and attract foreign investment. This strategic move positions Rio Tinto as a significant player in the battery materials market, amidst the escalating demand for lithium.
Scaling Up Lithium’s Next Frontier
The Rincon project, situated in Argentina’s Andean salt flats, is poised to emerge as a leading lithium operation globally. Forming part of the renowned “lithium triangle,” which hosts over half of the world’s lithium resources, this expansion will boost the annual production capacity to 60,000 metric tons of battery-grade lithium carbonate, a significant increase from its current 3,000-ton starter plant.
Construction of the expanded facility is slated to commence in mid-2025, pending permitting, with initial production scheduled for 2028. The project’s full ramp-up to capacity is anticipated to span three years. This ambitious endeavor reflects the surging demand for lithium, dubbed “white gold,” a crucial component in electric vehicle (EV) batteries and renewable energy storage. Despite recent price declines in lithium due to oversupply and a temporary dip in EV demand, Rio Tinto remains steadfast in its commitment.
Jakob Stausholm, Rio’s CEO, emphasized the enduring potential of lithium, propelled by the global shift towards green energy. He highlighted, “Building on Argentina’s supportive economic policies, skilled workforce, and exceptional resources, we are positioning ourselves to become one of the top lithium producers globally. This investment, coupled with our proposed Arcadium acquisition, solidifies lithium as a key pillar of our commodity portfolio for years to come.”
Leveraging Innovative Technology
The Rincon project will adopt direct lithium extraction (DLE) technology, a cutting-edge method considered more environmentally friendly than conventional extraction techniques. DLE, unlike traditional methods that consume significant amounts of water, conserves water, minimizes waste, and ensures consistent production of high-quality lithium carbonate.
Currently, 13 operational DLE projects are projected to collectively reach an output of 124,000 tonnes in 2024. Benchmark data forecasts that DLE could supply 14% of global lithium by 2035, generating 470,000 tonnes of lithium carbonate equivalent (LCE), underscoring its escalating significance in battery and EV markets. However, RBC Capital Markets analyst Kaan Peker cautioned that while DLE shows promise, it also carries risks due to its relatively untested nature, including potential cost overruns and technological challenges.
Argentina’s Lithium Boom: Policy Meets Opportunity
The Rincon investment underscores Argentina’s potential as a key global lithium hub, with the South American nation ranking as the world’s 4th-largest lithium producer and boasting the largest lithium reserves worldwide.
Argentina’s lithium production is projected to surge from 43,719 metric tons in 2023 to over 261,000 metric tons by 2027. By 2028, it is poised to surpass Chile as South America’s leading lithium producer, capturing 13.1% of global lithium production, a substantial increase from 4.4% in 2023. This growth is bolstered by record-breaking mine production and lithium reserves, highlighting the country’s economic reforms spearheaded by President Milei, creating an attractive environment for foreign investors.
Central to this effort is the Incentive Regime for Large Investments (RIGI), a legislative framework offering tax benefits, currency stability, and trade incentives, providing regulatory certainty for 30 years and safeguarding projects like Rincon from future policy changes. Stausholm lauded Rincon as a “poster child” for the RIGI program, commending its success in attracting and protecting foreign investments. Rio Tinto’s decision to expand Rincon underscores its confidence in Argentina’s resources, workforce, and supportive policies.
Beyond Rincon: Rio’s Bold Moves in the Battery Market
Rio Tinto’s investment in Rincon forms part of a broader strategy to establish lithium as a cornerstone of its commodity portfolio. The recent acquisition of Arcadium Lithium, a U.S.-based miner, for $6.7 billion signals Rio’s commitment to becoming a leading player in the lithium market.
Furthermore, Rio is exploring lithium opportunities in Chile, including a potential stake in Codelco’s Maricunga project, and planning to develop Europe’s largest lithium mine in Serbia. Despite challenges posed by fluctuating lithium prices, Stausholm reiterated Rio’s dedication to accelerating Arcadium’s projects and ensuring timely delivery of Rincon’s additional production, set to significantly contribute to the global lithium supply by 2028.
In addition to lithium, Rio Tinto aims to expand its presence in Argentina’s copper sector through its Nuton venture, holding a stake in the Los Azules copper project, which recently cleared key permitting hurdles. Stausholm expressed Rio’s interest in furthering its copper investments in Argentina, prioritizing the fulfillment of existing commitments before pursuing new opportunities.
Rio Tinto’s $2.5 billion investment in the Rincon lithium project marks a significant milestone in its endeavor to develop a world-class battery materials portfolio, reinforcing its position in the global lithium market and showcasing Argentina’s emergence as a key player in the energy and mining sectors. By leveraging advanced technology like DLE, committing to sustainable practices, and capitalizing on Argentina’s favorable investment climate, Rio Tinto’s project stands to play a pivotal role in the green energy transition.
