Rio Tinto cements commitment to lithium future with $2.5b Rincon expansion

Rio Tinto (ASX: RIO) continues to show faith in lithium’s long-term future by electing to invest $2.5 billion to expand the capacity of its Rincon project in Argentina to 60,000 tonnes per year.

The investment comes in the wake of Rio producing first lithium at the Rincon starter plant just 32 months after finalising the greenfield project’s acquisition.

Rincon is the company’s first commercial-scale lithium operation.

World-class portfolio

Chief executive Jakob Stausholm said the decision to expand Rincon demonstrates Rio’s commitment to building a world-class battery materials portfolio.

“The attractive long-term outlook for lithium, driven by the energy transition, underpins our investment in Rincon,” Mr Stausholm said.

“We are dedicated to developing this tier 1 resource at scale at the low end of the cost curve.”

“We are equally committed to meeting the highest ESG standards, while continuing to grow our mutually beneficial partnerships with local communities and Salta province.”

“This investment, alongside our proposed Arcadium acquisition, ensures that lithium will become one of the key pillars of our commodity portfolio for decades to come.”

Reserves increase

The expansion plan comes after Rincon’s reserves were found to be 60% higher than assumed at the time of acquisition.

Rincon’s capacity of 60,000t of battery-grade lithium carbonate per year comprises the 3,000t starter plant and a 57,000t expansion plant.

The project has an estimated mine life of 40 years, with construction of the expanded plant scheduled to begin in mid-2025, subject to permitting.

The company expects first production in 2028, followed by a three-year ramp-up to full capacity, generating significant job creation and economic opportunities for local businesses.

‘Lithium triangle’

Located in the heart of Argentina’s ‘lithium triangle’, the Rincon project’s brine extraction operation uses a production well-field, processing and waste facilities, as well as associated infrastructure.

The project uses direct lithium extraction technology, a process that supports water conservation, reduces waste and produces lithium carbonate more consistently than other methods.

Rio estimates the expansion to be in the first quartile of the cost curve.

Lithium ambitions

“This investment supports Argentina’s ongoing ambitions to become a world-leading lithium producer,” Mr Stausholm said.

“Argentina’s economic reforms and the new incentive regime for large investments provide a favourable environment for investment, offering benefits such as lower tax rates, accelerated depreciation and regulatory stability for 30 years.”

Mr Stausholm added that this will safeguard the project from future policy changes, while also offering enhanced investor protections.