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Rio Tinto has ‘eureka moment’ with California lithium discovery

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Via Financial Times

Rio Tinto said it had found a potentially large source of lithium for electric car batteries while looking for gold in piles of waste rock in California, describing it as a “eureka moment” for the company.

The London-based miner said it could become the largest producer of lithium for batteries in the US if it can successfully process the rock on a larger scale.

The discovery may pave the way for Rio’s entry into the lithium market, which is set to see dramatic growth over the next decade due to the rise of electric vehicles, which are powered by lithium-ion batteries.

Lithium is currently produced in South America and Australia and is controlled by five producers, two of whom are Chinese. But the administration of President Donald Trump is keen to encourage domestic supply to meet the needs of its carmakers.

Currently the only lithium produced in the US is that extracted from brine in Silver Peak, Nevada, in a facility owned by producer Albemarle. But the company does not disclose how much is produced, and analysts say it is not substantial.

Simon Moores, managing director of Benchmark Mineral Intelligence, a consultancy, said the discovery was a low-cost way for Rio to get to grips with the chemical processing required to turn lithium into a form suitable for batteries. The mining company would be in a position to look at scaling up production once it had done so, he added.

“They’re gaining confidence that the EV industry is real and we have a clear pathway forward,” said Mr Moores. “I don’t see it as a volume play but as an IP [intellectual property] play. You understand the processing first hand, then the key is where do you go after that?”

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In 2017 Rio was said to have looked at acquiring a stake in Chile’s SQM, the world’s second-largest producer, but China’s Tianqi Lithium ended up buying a stake in the company.

The miner has a large deposit of borates, an ingredient used in goods such as fertilisers and detergents, that also contains lithium in Serbia. However it has not substantially advanced plans to develop the deposit.

Rio said the California discovery occurred while it was looking for gold in the waste rock from a 90-year-old borate mine.

“Our team had a eureka moment when they did some testing to look for valuable minerals beyond boron in our waste rock and found high grades of lithium,” said Bold Baatar, chief executive of energy and minerals at Rio. “If the trials continue to be successful, this has the potential to become America’s largest domestic producer of battery grade lithium — all without the need for further mining.”

Rio said it was investing $10m to build a pilot plant on-site to treat the waste rock and purify the lithium into a form suitable for batteries. This will be able to produce enough lithium for 30 Tesla Model S batteries, it said.

The next phase will be a $50m investment in an industrial scale plant with a capacity of up to 5,000 tonnes of lithium-carbonate equivalent per year, enough for about 15,000 Tesla Model S batteries. Lithium carbonate is the most common form used in batteries.

Still, that is likely to be a small part of global lithium supply, which is expanding rapidly and last year was an estimated 284,000 tonnes of lithium carbonate, according to Australian bank Macquarie.

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