Rio Tinto hunts Lithium Exploration Efforts in Australia.
July 12, 2023: Rio Tinto, a leading mining company, is doubling its efforts to locate hard rock lithium reserves in the remote outback of Western Australia. The company has confirmed its intention to extend an exploration partnership near Sandstone for the third time in two years.
Rio Tinto’s CEO, Jakob Stausholm, has been vocal about the company’s ambition to increase its involvement in the battery material sector. In pursuit of this goal, Rio Tinto completed the acquisition of the Rincon project in Argentina for $1.2 billion last year. They also produced lithium from waste rock at a Californian mine and entered a partnership with Canadian spodumene producers in Quebec.
Despite having its licenses revoked in 2022, Rio Tinto remains optimistic about its $2.4 billion plan to construct Europe’s largest lithium mine in Serbia’s Jadar Valley.
Recently, Rio Tinto Exploration, a subsidiary of Rio Tinto, announced its plans to initiate a drilling program near Sandstone to assess reserves at the Rover Project. Everest Metals, an ASX-listed lithium company, revealed this development and witnessed an 11% increase in its share price. The partnership between Rio Tinto and Everest Metals began in March 2021, with Rio Tinto paying an initial sum of $25,000 for exclusive exploration rights. In October 2022, Rio Tinto further invested $5 million for continued exploration and acquired an 80% interest in the venture.
In addition, Rio Tinto signed an agreement with Canada’s Azimut Exploration, exploring the possibility of selling a stake in its Corvet and Kaanaayaa lithium properties in exchange for funding from Rio Tinto for project development.
Western Australia is the largest source of hard rock lithium globally, accounting for over 70% of Rio Tinto’s earnings from iron ore. Conversely, South America leads in brine-based lithium production.
Mr. Stausholm expressed Rio Tinto’s interest in lithium assets but highlighted the high price tags associated with lithium, even for projects within Western Australia. He ruled out Rio Tinto’s involvement in mergers and acquisitions, including Albemarle Corporation’s unsuccessful $5.5 billion bid for emerging lithium miner Liontown Resources.
Australia’s lithium industry has experienced significant growth in recent years due to the surge in demand from lithium-ion battery and electric vehicle manufacturers. Most Australian lithium is exported as spodumene concentrate, which contains about 6% lithium content and is considered lower quality and lower priced than lithium hydroxide.
UBS predicts that Australian lithium spodumene concentrate prices will average $3,750 per tonne in the six months leading up to December 31. They anticipate a decline to $3,500 per tonne in 2024, $3,000 per tonne in 2025, and $2,500 per tonne in 2026, eventually stabilizing at $1,300 per tonne in the long term.
After a sharp decline caused by China reducing electric vehicle subsidies earlier this year, lithium prices have begun to recover. The trajectory of lithium prices will be influenced by Chinese electric vehicle sales in the near term.
As Rio Tinto expands its exploration activities in Western Australia, its ongoing efforts to secure lithium reserves reflect the growing importance of this crucial battery material in the global transition toward sustainable energy solutions.