Rio Tinto (ASX, NYSE: RIO) announced Thursday it will invest $2.5 billion to increase production capacity at its Rincon lithium project in Argentina to 60,000 tonnes per year.
Rincon is the company’s first commercial-scale lithium operation.
The capacity of 60,000 tonnes of battery-grade lithium carbonate per year includes a 3,000-tonne starter plant and a 57,000-tonne expansion plant. The mine life is expected to be 40 years, with construction of the expanded plant scheduled to begin in mid-2025, subject to permitting.
First production is expected in 2028, followed by a three-year ramp-up to full capacity.
Located in the heart of Argentina’s ‘lithium triangle,’ the Rincon project consists of brine extraction using a production wellfield, processing and waste facilities, and associated infrastructure. The project uses direct lithium extraction (DLE) technology.
Shares of Rio Tinto fell 2.5% to $63.38 per share in New York following the announcement, giving the miner a market capitalization of $103 billion.
The investment follows Rio’s takeover of Arcadium Lithium in a $6.7 billion deal announced in October, which puts Rio on track to become the world’s third-largest lithium miner, behind leader Albemarle (NYSE: ALB) and Chile’s SQM (NYSE: SQM). The announcement comes at a time when lithium prices are weakened by Chinese oversupply and a slowdown in EV sales.
“The attractive long-term outlook for lithium driven by the energy transition underpins our investment in Rincon. We are dedicated to developing this tier-1, world-class resource at scale, at the low end of the cost curve,” CEO Jakob Stausholm said in the statement.
The investment also aligns with Argentina’s ambitions to become a world-leading lithium producer.
“Argentina’s economic reforms and the new Incentive Regime for Large Investments provide a favorable environment for investment, offering benefits such as lower tax rates, accelerated depreciation, and regulatory stability for 30 years, protecting the project from future policy changes,” Rio Tinto said.
“The announcement shouldn’t come as a surprise, given the company’s known appetite for the metal, and the project is already incorporated within its capex guidance,” BMO said in a note.
“However, we note it comes at a time when a number of other lithium projects are being delayed and project funding has become more challenging given lithium pricing pressure.”
Rio’s lithium strategy also involves the Jadar project in Serbia, which would create Europe’s biggest lithium mine.
The project, however, faces strong local opposition from environmental groups and in 2022 the government halted the licensing process.
In July, Serbia reinstated Rio Tinto’s license to develop the project, but securing permits could take at least two years.
