Rio Tinto (ASX:RIO) plans to invest $2.5bn at its Rincon lithium project in Argentina.
The aim is to lift production capacity at Rincon to 60,000 tonnes of battery-grade lithium carbonate per year. The project will combine a 3,000-tonne starter plant with a newly constructed 57,000-tonne expansion facility. The development will support a mine life of approximately 40 years.
Construction of the expanded facility is expected to commence in mid-2025, subject to permitting, with first production targeted for 2028. The ramp-up to full capacity is projected to take three years, promising significant job creation and economic benefits for the surrounding community.
The announcement follows news that the company, along with BHP, is facing possible class-action lawsuits alleging widespread and systemic sexual harassment at Australian mine sites.
Direct lithium extraction
Rincon employs direct lithium extraction. DLE is a non-evaporative method. It uses chemical processes, ion-exchange resins or adsorption to isolate lithium directly from brine water. This process contrasts with the more traditional method of evaporation ponds, which rely on solar evaporation to concentrate the lithium over months or even years.
DLE is seen as more sustainable compared to evaporation, as it also produces lithium carbonate of higher consistency. However, it is relatively new in the context of large-scale production, and some analysts have expressed caution. Its commercial adoption is still in its early stages.
Rincon and Rio
Rincon is located in Argentina’s “lithium triangle”. The project’s ore reserves are now 60% higher than initially estimated at the time of Rio acquisition of Rincon.
Rio Tinto Chief Executive Jakob Stausholm highlighted the project’s alignment with Rio’s ambitions to become a top-tier lithium producer at the “low end of the cost curve”. He added that the company’s DLE approach will halve water usage in processing.
The investment aligns with Argentina’s push to become a lithium leader. Economic reforms in Argentina and the introduction of the Incentive Regime for Large Investments (RIGI) provide a favourable environment. RIGI offers benefits such as reduced tax rates, accelerated depreciation, and regulatory stability for 30 years, shielding the project from future policy changes.
Shares in Rio closed 2.76% lower on Friday at $120.72.
