Rio Tinto shares higher on $535 million lithium news

This mining giant's foray into lithium is gathering pace.

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Rio Tinto Ltd (ASX: RIO) shares are pushing higher on Wednesday morning.

At the time of writing, the mining giant's shares are up 1% to $121.50.

Why are Rio Tinto shares pushing higher?

Today's gain appears to have been driven largely by a rebound in iron ore prices overnight in China.

The iron ore price for May rose over 5% on the Dalian Commodity Exchange to US$115.87 a tonne.

This ends a difficult run for the steel making ingredient and has sparked hopes that the recent rout could be over.

Anything else?

There was also a spot of news out of Rio Tinto this morning, which may have gone down well with investors.

That news relates to its lithium operation in the lithium triangle of Argentina.

According to Reuters, Rio Tinto plans to invest US$350 million (A$535 million) in its Rincon lithium plant in Argentina as it works to commence production by the end of 2024.

Commenting on Rio Tinto's lithium plans following a site visit, the miner's CEO, Jakob Stausholm, said:

The hard work of our Rincon team is laying the groundwork for our first lithium production by year's end.

What is the Rincon project?

The Rincon Lithium Project is a large, lithium-brine project located in the heart of the lithium triangle in Argentina.

Rio Tinto believes it will be a valuable source of rapidly produced, high-quality lithium for the global energy transition.

It highlights that it is a long-life, scalable resource capable of producing battery-grade lithium carbonate from raw brine. It also believes the project will help the miner deliver this vital resource to the global energy industry while meeting its own commitment to decarbonise its operations by 2050.

It is currently developing a small starter battery-grade lithium carbonate plant with a capacity of 3,000 tonnes per year. Production from this plant is expected to commence by the end of the year.

Once operational, the project is likely to be supplying lithium to auto giant Ford (NYSE: F). Back in 2022, the two companies signed a non-binding agreement that could see Ford become the foundation customer for the Rincon lithium project.

Rio Tinto shares are up 6.5% over the last 12 months despite recent weakness.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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