Rio Tinto's lithium project sparks controversy over resource management in Argentina
- Rio Tinto has reported 1.54 million tons of lithium carbonate equivalent in measured resources within the Rincon project.
- The operation is expected to produce 53,000 tons of battery-grade lithium annually for 40 years.
- Activist investors are urging Rio Tinto to consolidate its corporate structure amidst scrutiny of its current operations.
In December 2023, Rio Tinto announced initial resource and reserve estimates for its Salar del Rincon lithium brine project located in Salta, Argentina. The project contains significant lithium resources, including 1.54 million tons of measured resources, 7.85 million tons of indicated resources, and 2.29 million tons of inferred resources, along with probable reserves of 2.07 million tons. This advance marks Rio Tinto's strengthening presence in the rapidly evolving mining sector, enhanced by its acquisition of Arcadium Lithium, which allows the company to further capitalize on the growing demand for lithium, primarily for electric vehicle batteries. Positioned in the 'Lithium Triangle' alongside Bolivia and Chile, the Rincon project is expected to begin production of battery-grade lithium at an annual rate of 53,000 tons, set to continue for over 40 years, with possible expansions to reach 60,000 tons per year. The completion timeline for the Rincon 3000 starter plant is projected for mid-2025. Emphasizing the project's lower environmental impact compared to others like the controversial Jadar project in Serbia, Rincon's lithium extraction utilizes brine and advanced technologies like direct lithium extraction (DLE). Argentina, already the world's fourth-largest lithium producer, has experienced noticeable economic growth in this sector, with lithium exports reaching $835 million in 2023. Nearly half of this lithium was exported to China, highlighting the country’s role as a significant player in the global supply of battery materials for electric vehicles and technologies. President Javier Milei, who took office at the end of 2023, has been actively encouraging investment in mining projects by offering tax and customs incentives, potentially easing the way for various mining firms to enter the Argentine market, thus facilitating the development of over 40 preliminary lithium projects. Although Rio Tinto's management has taken steps to diversify operations, the company's dual corporate structure has faced criticism, especially from activist investor Palliser Capital. They argue that this outdated structure has resulted in a loss of $50 billion in shareholder value. The call for consolidation from Palliser highlights broader concerns about the sustainability of Rio Tinto's approach to mergers and acquisitions within the current market landscape.