Rio Tinto to invest US$2.5bn in Argentina lithium mine

RIO TINTO has announced plans for a 20-fold expansion of lithium extraction at a mine in northwest Argentina.

The mining giant’s US$2.5bn investment will see capacity at the Rincón mine ramp up from the current 3,000 t/y to 60,000 t/y from the expected completion date in 2028.

To date, 1.54m t of lithium carbonate equivalent (LCE) has been measured at the Salta province mine, with an additional 7.85m t of indicated LCE. Rincón is expected to operate for 40 years.

Lithium is a critical metal for electric vehicle (EV) batteries. Rio Tinto signed a memorandum of understanding with carmaker Ford earlier this year for a lithium supply agreement. Currently, over 40% of all Argentine lithium is sold to Chinese companies, most of which is used is used for EV batteries. 

In a presentation to investors last week, the Rincón project’s managing director Guillermo Caló credited the speed at which they had been able to extract lithium from the existing mine, which Rio Tinto acquired in late 2021. Caló said this also informed the decision to acquire US lithium miner Arcadium for US$6.7bn in October. Arcadium control four lithium sites in northwest Argentina with estimated reserves of 42m t of LCE.

Arcadium lithium sites in northwest Argentina have been blamed for causing rivers to dry up,  leading to a regional court ruling in March to suspend granting mining licenses in the Salar del Hombre Muerto region of the Catamarca province, bordering Salta.

However, instead of the traditional method of producing lithium by evaporating lithium brine, which relies on large amounts of water, the Rincón mine will extract the metal directly from the ground. Rio Tinto claims the new technology can reduce the amount of water used in lithium production by 50%.

Rio Tinto group CEO, Jakob Stausholm, said: “This investment, together with our proposed acquisition of Arcadium, ensures that lithium will be a key pillar of our commodity portfolio for decades to come.”

Arcadium shareholders will vote on the acquisition by Rio Tinto in early 2025.

Economic climate change

Stausholm added that the decision to invest heavily in Argentine lithium was also motivated by the country’s “favourable economic policies”.

Earlier this year, Rio Tinto signed up to the Argentine government’s new scheme offering reductions in corporate tax and VAT rates to multinational companies investing at least US$2bn in the country. The scheme also removes some import and export regulations.

The Argentine government wants the country to become a major producer of lithium as the global demand for electric vehicles continues to increase. The country is thought to hold the second largest lithium reserves in the world, with the Salta province lying in the heart of the so-called “lithium triangle” of Argentina, Bolivia, and Chile, holding more than 50% of the world’s identified lithium resources.