Rio Tinto will redouble efforts to find hard rock lithium in the Western Australian outback, after confirming it would extend an exploration partnership near the town of Sandstone for the third time in two years.
Rio Tinto chief executive Jakob Stausholm has madeno secret of the miner’s desire to increaseexposure to the battery material.
io finalised the $US825 million ($1.2 billion) acquisition of the Rincon project – near Orocobre’s flagship Olaroz operations – in Argentina last year. The Ango-Australian mining major already produces lithium from waste rock at a Californian mine, and last year entered into partnership with Canadian spodumene producers in the Canadian province of Quebec.
And despite having its licences revoked in 2022, Rio has not given up hope for its$US2.4 billion plan to build Europe’s biggest lithium minein Serbia’s Jadar Valley.
On Tuesday, ASX-listed lithium hopeful Everest Metals told investors that Rio Tinto Exploration, a subsidiary of Rio, will commence a drilling program to assess reserves at its Rover Project, located near Sandstone.
Shares in the ASX minnow rallied 11 per cent to 25¢ on the news. Rio’s subsiduary signed a binding term sheet with Everest in March 2021, where the mining major paid the junior explorer an initial $25,000 for 6 months of exclusive exploration for non-gold minerals. Then in October 2022, Rio took an 80 per cent interest in the venture and shelled out $5 million for further exploration.Overnight, Rio also signed a deal with Canada’s Azimut Exploration to potentially sell a stake in its Corvet and Kaanaayaa lithium properties in exchange for funding from the Australian mining major for development on those projects.
Western Australia, where Rio makes more than 70 per cent of its earnings from iron ore, is the biggest source of hard rock lithium in the world while South America leads in brine-based lithium production.
Mr Stausholm, speaking after Rio’s annual general meeting in Perth in May, said the miner was in the market for lithium assets but he was deterred by the high price tags in lithium, even for developments in WA.
He all but ruled out Rio becoming involved in M&A activity, highlighted byAlbemarle Corporation’s spurned $5.5 billion bid for emerging lithium miner Liontown Resources.
Australia’s lithium industry has blossomedover the past eight years on surging demand from the manufacturers of lithium-ion batteries and electric vehicles.
The vast majority of Australian lithium is exported as spodumene concentrate with close to 6 per cent lithia content, a lower quality and lower priced product than lithium hydroxide.
UBS predicts Australian lithium spodumene concentrate will fetch an average of $US3750 a tonne in the six months to December 31. The Swiss bank reckons spodumene concentrate with 6 per cent lithium will fetch $US3500 a tonne in 2024, $US3000 a tonne in 2025 and $US2500 a tonne in 2026 before settling at a long term price of $US1300 a tonne.
The recovery in lithium prices follows ahorror five-month periodduring which theytumbled more than 70 per centafter China curbed electric vehicle subsidies in January, a move that led to faltering demand and rising inventories.
Lachlan Shaw, co-head of mining research at UBS, observed last moth that commodity prices continue to recover after bottoming in April. But all eyes are on Chinese EV sales which will determine where the lithium price settles in the near term.
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