Rio Tinto (ASX:RIO) share price lower after major investment into lithium

Rio Tinto wants to join the lithium party.

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The Rio Tinto Ltd (ASX: RIO) share price has tipped lower on Wednesday after the company revealed a $2.4 billion investment into its Jadar lithium project.

At the time of writing, the Rio Tinto share price is down 1.04% to $131.12.

Rio Tinto to scale up exposure to battery materials

The Rio Tinto share price might be looking to ride the hype behind the lithium industry after committing $2.4 billion to fund its Jadar lithium-borates project in Serbia.

This move is designed to “scale up Rio Tinto’s exposure to battery materials, and demonstrate the company’s commitment to investing capital in a disciplined manner to further strengthen its portfolio for the global energy transition”.

The Jadar project will produce both battery-grade lithium carbonate, used in electric vehicles and battery storage, and borates, used in solar panels and wind turbines.

The company believes the project will position Rio Tinto as the “largest source of lithium supply in Europe for at least the next 15 years”.

The sheer size and scale of the project is expected to have a significant impact on the Serbian economy.

Rio Tinto estimates that Jadar will be one of the largest industrial investments in Serbia and potentially contribute 1% directly and 4% indirectly to the country’s GDP.

Management commentary

Rio Tinto chief executive Jakob Stausholm said:

We have great confidence in the Jadar project and are ready to invest, subject to approvals. Serbia and Rio Tinto will be well-positioned to capture the opportunity offered by rising demand for lithium, driven by the global energy transition and the project will strengthen our offering, particularly to the European market. It could supply enough lithium to power over one million electric vehicles per year.

When will production start?

The announcement advised the first “saleable” production is expected in 2026 which will be followed by a ramp-up to full production by 2029.

By then, Jadar is expected to produce ~58,000 tonnes of lithium carbonate, 160,000 tonnes of boric acid and 255,000 tonnes of sodium sulphate annually.

Based on these figures, this would position Rio Tinto as one of the top ten lithium producers in the world.

For now, Rio Tinto will be seeking both an exploitation licence and regulatory approvals including the approval of the environmental assessment studies.

Rio Tinto share price nears record highs

The Rio Tinto share price is within an arm’s reach of its 10 May all-time high of $133.42.

Shares in the iron ore major have edged 0.67% lower to $131.58, broadly consistent with the S&P/ASX 200 Index (ASX: XJO) which is down 0.22%.

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