Rio Tinto is building its battery materials business for a bigger share of the global transition to renewable energy.
The deal to buy the Rincon lithium project in Argentina for $US825 million ($A1.2 billion) announced on Wednesday has the potential to have one of the lowest carbon footprints in the industry, Rio Tinto said.
“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,” Rio Tinto chief executive Jakob Stausholm said.
“It is expected to be a long life, low-cost asset that will continue to build the strength of our battery materials portfolio.”
Rio, the world’s second biggest mining and minerals conglomerate behind BHP, is banking on continuing global demand for battery grade lithium and has assets spanning the US, Europe and South America.
Lithium demand is forecast to grow by 25 to 35 per cent over the next decade, potentially causing a shortage in the second half of the 2020s, Rio said.
Rincon is a large undeveloped lithium brine project located in the heart of the lithium triangle in the Salta Province of Argentina, that is capable of producing battery grade lithium carbonate.
A pilot plant is currently running at the site, where the direct lithium extraction technology could prove to be more efficient than solar evaporation ponds.
Subject to Australia’s Foreign Investment Review Board approval, the transaction is expected to be completed in the first half of 2022.