Rio Tinto has committed $2.4bn to take its Jadar lithium project in Serbia to full production of 58,000 tonnes of lithium carbonate by 2029, as it targets entry into the lithium market and the energy storage revolution.
One of the world’s biggest miners and commodity players will evolve into a chemical producer to make battery grade lithium carbonate from an entirely new mineral source, jadarite, for which it will build an underground mine.
It will also produce nearly three times as much boron and five times as much sodium as part of the process.
Rio Tinto expects the first saleable production of lithium carbonate to be in 2026 with a ramp up to full production by 2029.
It has targeted an initial mine life of 2.3m tonnes of lithium carbonate over 40 years and the company explained it was still awaiting all the “necessary permits”.
“This is a significant moment for the lithium industry,” said Benchmark’s Managing Director, Simon Moores.
“It marks the first time big outside money from a single miner or chemical maker has entered lithium and invested in an entirely new source.”
“While expectation is that Rio Tinto will produce lithium carbonate at a run rate of 58,000 tonnes at full production, the strategy is usually more aggressive once proof of production is achieved and the product is accepted by battery and EV makers,” he added.
Benchmark’s Product Director, Andrew Miller added:
“Commercialising the new technology required to progress the Jadar project will take time, but its potential scale could put it amongst the largest single lithium production sites globally by the end of the decade.”
RIO TO HAVE 5% OF LITHIUM MARKET, EXPECT MORE TO COME
Rio Tinto has been particularly cautious with its lithium strategy to date and whilst investing in a new mine, chemical plant, and process is a significant moment, it only means as things stand the company will produce little under 5% of the world’s lithium chemicals in 2029 (Benchmarkdata).
In lithium carbonate terms, however, Benchmark anticipates that if Rio Tinto hits its production run rate in 2029 that it will account for 9% of the world’s lithium carbonate output.
Rio Tinto can expand Jadar to 120,000 tonnes/year of lithium carbonate but the decision will likely take place in 2027.
There is little doubt that any new supply of lithium carbonate that can be used in a battery cell will be in high demand as the great raw material disconnect continues to widen.
Benchmarkis forecasting a significant lithium supply deficit of 915,000 tonnes LCE in 2029 even with Rio Tinto’s new supply coming into the market.
This is a supply-demand gap that is more than twice as large as the lithium market will be this year.
One expects, however, for Rio Tinto’s plans in Jadar to aggressively ramp up once its commercial production is confirmed and end users qualify the material.
It also sees Rio Tinto enter the lithium market in a serious way for the first time, opening the door to future acquisitions of both hard rock miners, brine extractors, and chemical makers as the world’s third biggest commodity giant positions itself for the electric vehicle ramp up.
Considering Rio Tinto’s potential future profits from other commodities especially iron ore, lithium M&A is likely a formality in the coming years.
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