Rio Tinto Group (ASX: RIO) (LON: RIO) prepares for production at its Rincon lithium plant in Argentina by the end of 2024, which will also include an investment of USD$350 million.
The company acquired the Argentinean asset in March of 2022, stating it would aid Rio Tinto in meeting a double-digit growth in demand for lithium over the next decade, amid constrained supply.
A resource estimate from July 2021 for the lithium project indicates measured and indicated resources of lithium carbonate equivalent at 5.8 million tonnes, along with inferred resources at just under 6 million tonnes.
Rincon boasts reserves of almost 2 million tonnes of contained lithium carbonate equivalent, providing for a 40-year mine life. Rio Tinto plans to employ a direct, low-cost extraction technology at the operation, as it believes this method has the “potential to significantly increase lithium recoveries” compared to solar evaporation ponds.
The company intends to establish a battery-grade lithium carbonate plant with an annual capacity of 3,000 tonnes.
Rio Tinto stated that it is collaborating with local communities and authorities to guarantee environmental standards. Argentina, forming part of the “lithium triangle” with Chile and Bolivia, which collectively possess half of the world’s lithium resources, has been increasingly drawing investment from international lithium miners.
According to the U.S. Geological Survey, the country’s lithium production surged by over 45 per cent from 2022 to 2023, reaching 9,600 metric tons.
Rio Tinto projects that committed lithium supply and capacity expansions will only account for approximately 15 per cent of demand growth between 2020 and 2050. The remaining 85 per cent will need to be fulfilled by new projects.
Read more: Lithium South preliminary economic assessment shows optimism for lithium’s future
Read more: Lithium South near completion of production well and economic assessment at flagship operation
Companies in the lithium triangle continuing to work despite supply glut
Argentina is a member of the so-called “lithium triangle” along with Chile and Bolivia. The triangle collectively possesses approximately half of the world’s lithium resources, has been increasingly drawing investment from international lithium miners.
According to the US Geological Survey, the country’s lithium production surged by more than 45 per cent from 2022 to 2023, reaching 9,600 metric tons.
However, that could be changing in the future.
A Fastmarkets report released late last month indicated that lithium prices have plummeted more than 80 per cent from their all-time high in 2022. The prices dropped from an all-time high exceeding $80,000 per metric ton in 2022 to below $14,000.
Yet despite a buildup in supply and its attendant downstream effects on production, production in the lithium triangle hasn’t shown any signs of slowing down.
Lithium South Development Corporation (TSXV: LIS) (OTCQB: LISMF) (Frankfurt: OGPQ) successfully installed the first production well at its flagship Argentina lithium brine project’s largest claim block.
The junior miner announced on March 14 that it had drilled the well to a depth of 400 meters. Lithium South stated that it had prepared the well before conducting a series of long-term pumping tests.
Meanwhile, Sociedad Química y Minera de Chile (SQM) (NYSE: SQM) has decided to continue contributing to supply, by building stockpiles of the battery metal for when the market rebounds.
This would keep prices under pressure and result in its own sales increasing by only 5 to 10 per cent as global demand rises by at least 20 per cent.
Lithium South Development Corporation is a sponsor of Mugglehead News Coverage
.
Follow Joseph Morton on Twitter
joseph@mugglehead.com
