The Rio Tinto Limited (ASX: RIO) share price is falling this morning amid news the company plans to fork out US$825 million – $1.15 billion – on an Argentinian lithium mine.
The Rincon lithium project is a large brine project with the potential to be one of the lowest carbon operations in the industry. And it could soon be Rio Tinto's.
In early morning trade, the Rio Tinto share price is $100.73, 0.66% lower than its previous close.
For context, the S&P/ASX 200 Index (ASX: XJO) is currently down 0.04%.
Let's take a closer look at today's non-price sensitive news from the mining giant.
Rio Tinto share price slips amid acquisition news
The Rio Tinto share price is in the red amid an agreed-upon acquisition in South America's 'lithium triangle'.
The Rincon project can produce battery-grade lithium carbonate. The company said the acquisition highlights its commitment to battery materials and its portfolio for the global energy transition.
Rio Tinto CEO Jakob Stausholm commented on the acquisition, saying:
The Rincon project holds the potential to deliver a significant new supply of battery grade lithium carbonate, to capture the opportunity offered by the rising demand driven by the global energy transition. It is expected to be a long life, low-cost asset that will continue to build the strength of our Battery Materials portfolio, with our combined lithium assets spanning the US, Europe, and South America.
A pilot plant is already running at the project. However, it needs more work to optimise its recoveries.
Rio Tinto plans to complete studies on the Rincon project to confirm its resource and define resource statements.
Additionally, the company has proposed to use direct extraction technology that has the potential to significantly increase lithium recoveries when compared to traditional solar evaporation ponds.
According to the company, demand for lithium is expected to grow by up to 35% annually over the next decade. On top of that, lithium demand may begin to exceed supply from 2025.
The acquisition is subject to Australia's Foreign Investment Review Board's approval. If it receives the green light, the purchase should be completed in the first half of 2022.
Currently, Rincon Mining owns the Rincon project. Rincon Mining is, in turn, owned by Sentient Equity Partners.
Sadly, 2021 hasn't been a great year on the ASX for the Rio Tinto share price.
It has fallen 11% year to date. Though, it has gained 12% over the last 30 days.
