Rio Tinto (NYSE: RIO) will invest $2.5 billion to increase production capacity at its Argentina lithium project, it said on Thursday, as it seeks to cement its position as one of the world’s biggest miners of the battery metal.
The investment follows Rio’s takeover of Arcadium Lithium (NYSE: ALTM) in a $6.7 billion deal announced in October, and as prices of the metal used in electric vehicles (EVs) are weakened by Chinese oversupply and slowdown in EV sales.
Following the purchase of Arcadium, Rio is on track to become the world’s third-largest lithium miner, behind leader Albemarle (NYSE: ALB) and Chile’s SQM.
As part of the ramp-up, the Rincon project’s capacity will reach 60,000 metric tons, including a 3,000-ton starter plant and 57,000-ton expansion plant, according to Rio Tinto. The Rincon project earlier had a capacity of 53,000 tons.
“The attractive long-term outlook for lithium driven by the energy transition underpins our investment in Rincon,” Rio Tinto CEO Jakob Stausholm said.
Construction of the plant is scheduled to begin in mid-2025, with initial production from Rincon expected in 2028.
The investment is also in line with the South American nation’s ongoing ambitions to become a world-leading lithium producer.
Rio Tinto (NYSE: RIO) had been banking on its Jadar project in Serbia to supply much of Europe’s lithium needs but it could take at least two years to secure permits and the miner faces strong local opposition to its plans.
