Rio Tinto’s lithium market entry likely only start of battery metals ambitions

Opening a battery metals pandora’s box. Jadarite on display at Natural History Center in Svilajnac, Serbia Source: Wikimedia

Rio Tinto (NYSE :RIO) on Tuesday said it will spend $2.4 billion building a lithium mine in Serbia, from an entirely new mineral source – jadarite.

Melbourne-based Rio Tinto, the world’s second-largest mining company, said its Jadar project in Serbia is expected to start operating in 2026 and hit full-production in 2029. 

The investment, which still depends on Rio Tinto being granted the necessary permits in the eastern European nation, would turn the company into a top-10 lithium producer globally and position it “as the largest source of lithium supply in Europe for at least the next 15 years.”

Rio Tinto is targeting an initial mine life of 2.3 million tonnes of lithium carbonate over 40 years. Following ramp-up to full production in 2029, the mine will produce roughly 58,000 tonnes of lithium carbonate, 160,000 tonnes of boric acid (borates are used in solar panels and wind turbines) and 255,000 tonnes of sodium sulphate.

“Considering Rio Tinto’s potential future profits from other commodities especially iron ore, lithium M&A is likely a formality in the coming years”

This is a significant moment for the lithium industry,” said Simon Moores, MD of Benchmark Mineral Intelligence, a battery supply chain price reporting agency and research firm. 

“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.”

According to Benchmark data, Rio’s targeted run rate would see it corner a little under 5% of global lithium supply (and around 9% of the lithium carbonate market) when Jadar is operating at full tilt. 

The Anglo-Australian giant can expand the site to 120,000 tonnes per year of lithium carbonate – a decision that will likely take place in 2027, Benchmark believes.

Benchmark is forecasting a significant lithium supply deficit of 915,000 tonnes lithium carbonate equivalent in 2029 even with Rio’s new supply coming into the market.

To put that into perspective, that gap is more than twice as large as the lithium market will be this year. Benchmark notes:

“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.”