Mining giant Rio Tinto PLC (ASX: RIO) expects its lithium business to outpace the growth of its copper, iron ore, and other divisions, with plans to triple lithium output by 2028 to meet demand from electric vehicle and battery storage markets, a senior executive stated on Tuesday.
The world's second-largest mining company entered the lithium sector last year through its acquisition of US-based lithium producer Arcadium. This deal provided Rio Tinto PLC with mines, processing plants, and resources across four continents, along with a significant customer base that includes Tesla.
Rio Tinto PLC has been consolidating its assets in response to a sharp decline in lithium prices, a market downturn that triggered widespread industry layoffs until a recent easing in recent months.
In an interview on the sidelines of the Fastmarkets Global Lithium, Battery and Critical Materials conference in Las Vegas, Jerome Pecresse, head of the company's aluminum and lithium business unit, said Rio Tinto PLC is currently focused on developing new mines in Argentina and Canada. The company believes these projects will remain economically viable even if lithium prices fall again.
The company plans to produce at least 61,000 tonnes of lithium this year and aims to increase its capacity to 200,000 tonnes by 2028 to meet market needs.
"We want to prove we can deliver projects on time and on budget," said Pecresse, a former General Electric executive who joined Rio Tinto PLC in 2023, adding, "That takes up 90% of my time."
He emphasized that Rio Tinto PLC's goal is to bring online only low-cost mining projects to supply customers seeking long-term contracts. Most of these contracts include price floors and ceilings to protect both miners and buyers.
However, he acknowledged that the lithium market is in a growth phase compared to other major global commodities. The rapid transformation of lithium from a niche material to a high-demand economic staple underscores this point.
"In a way, it's a market that is finding its footing," he stated.
Pecresse declined to comment on any potential merger intentions between Rio Tinto PLC and Glencore, citing a six-month quiet period rule that expires in August.
Most of the company's growth will stem from its investment in direct lithium extraction (DLE) technology, which was a key reason for the Arcadium acquisition.
Pecresse said he expects one of Rio Tinto PLC's DLE projects to begin production within a few years. He added that the company currently has no plans to acquire other lithium mining projects.
"We are very happy with the Arcadium assets," said Pecresse, who mentioned he drives a hybrid vehicle, adding, "We have a clear roadmap with the target of reaching 200,000 tonnes of annual production by 2028."
While the Arcadium acquisition and the resulting growth could position Rio Tinto PLC as one of the world's largest battery metal producers—currently led by Albemarle—Pecresse stated that this is not his objective.
"Our strategy is not to be number one, or number three," he said. "Our strategy is to have a portfolio of sufficient scale to build close relationships with our customers."
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