Rio Tinto (ASX: RIO) venture into lithium sparks investor’s optimism

2 min read | March 20, 2024 04:54 PM AEDT | By Team Kalkine Media

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Rio Tinto (ASX: RIO) venture into lithium sparks investor’s optimism — Image source: shutterstock

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Rio Tinto Ltd (ASX: RIO) is making waves in the market as its shares surge by 0.71%% to AU$121.25 on Wednesday at 3:59pm AEDT. The driving force behind this upward momentum seems to be the rebound in iron ore prices witnessed overnight in China.

What’s driving Rio Tinto prices?

Iron ore prices for May experienced a notable increase of over 5% on the Dalian Commodity Exchange, reaching US$115.87 per tonne. This positive shift marks a significant turnaround for the steel-making ingredient, raising hopes that the recent downturn may be coming to an end.

Adding to the positive sentiment, Rio Tinto announced news related to its lithium operations in Argentina, which has likely resonated well with investors. The mining giant revealed its plans to inject US$350 million (AU$535 million) into its Rincon lithium plant in Argentina, with the aim of commencing production by the end of 2024.

CEO Jakob Stausholm expressed optimism regarding Rio Tinto's lithium endeavors, particularly highlighting the progress made by the Rincon team in laying the groundwork for the company's first lithium production by year's end.

The Rincon Lithium Project, situated in the lithium triangle of Argentina, is a significant undertaking for Rio Tinto. The project is poised to become a valuable source of high-quality lithium for the global energy transition.

Rio Tinto's commitment to decarbonise its operations by 2050 aligns seamlessly with the Rincon project's objectives. The company aims to supply this vital resource to the global energy industry while meeting its sustainability goals.

Currently, Rio Tinto is in the process of developing a small starter battery-grade lithium carbonate plant. The capacity of the plant is expected to be 3,000 tonnes per year. Production from this facility is slated to commence by the end of the year.

The Rincon project's potential extends beyond production, as it could also solidify partnerships with major players in the automotive industry. In 2022, Rio Tinto and Ford (NYSE:F) signed a non-binding agreement, positioning Ford as a potential cornerstone customer for the Rincon lithium project.

Despite recent fluctuations, Rio Tinto shares have demonstrated resilience, posting a 6.5% increase over the past 12 months. With its strategic ventures into lithium and the promising prospects of the Rincon project, Rio Tinto continues to capture the attention of investors seeking exposure to the burgeoning energy transition sector.

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