Rio Tinto in pilot plan to extract lithium from waste rock
Rio Tinto aims to join the electric car race by extracting lithium for batteries from waste rock.
Rio Tinto is looking to enter the US lithium market after approving a $US10m ($14.6m) pilot plant to process waste rock from its borates operations in California.
The mining giant has been eyeing an entry into the lithium space for some time, through its massive Jadar deposit in Serbia. It is also said to have expressed an interest in a stake in lithium major SQM and WA hopeful Kidman Resources — later bought by Wesfarmers for $776m.
But the mining giant is now dipping its toe into the US market ahead of an expected boom of electric vehicles in the world’s biggest car market, authorising a $US10m pilot plant in California’s Death Valley to look at producing lithium from waste at its 90-year old borate operation.
The success of the pilot could lead to another $US50m investment in an industrial plant capable of producing 5,000 tonnes of lithium carbonate equivalent a year through a novel process being developed to produce battery-grade carbonate directly from the waste.
Rio Tinto energy and minerals division boss Bold Baatar said in a statement that the company had been looking for gold and other minerals in waste piles, and had noticed high grades of lithium.
“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. If the trials continue to prove successful, this has the potential to become America’s largest domestic producer of battery grade lithium — all without the need for further mining,” he said.
“There are real benefits from a sustainability standpoint. The material being used has already been mined, so this will be a low energy option for the production of lithium. It’s a great example of the innovative thinking we are encouraging, to look at extracting additional value from our tailings, look outside our traditional commodities and not be afraid to try new approaches.”
The US has only one producing lithium operation, Albemarle’s Silver Peak lithium mine in Nevada, which produces about 4,000 tonnes of lithium carbonate equivalent a year.
But the country is a host to a slew of US and Australian hopefuls, seeking to take advantage of the country’s sudden interest in moving closer to self-sufficiency in critical industrial minerals such as lithium and rare earth elements.
Among them is Sydney-based Ioneer, which has a $US600m combined borates and lithium project undergoing feasibility in Nevada, close to Silver Peak.
In a client note on Monday, Ord Minnett analysts speculated Ioneer could become a target for Rio if the mining major wanted to extend its domination of the borates market — of which it controls 30 per cent — and begin lithium production in the US.
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Rio is almost alone among the major miners in expressing an interest in lithium — BHP boss Andrew Mackenzie has openly said that the economics of the sector do not stack up, and the company prefers nickel and copper to gain additional exposure to the mooted battery boom.
Glencore has focused on nickel and cobalt, as well as copper.
Recent weakness in the lithium market, as the build-out of processing facilities in China struggled to keep up with the influx of new concentrate from Australia, has pushed a number of producers to the brink and slowed development of mines and downstream processing facilities in Australia and elsewhere.
Until now Rio’s move into lithium was led by Jadar, with feasibility studies on the project — where Rio has already spent $US200m — likely before the end of 2020.
But the size of the deposit, at about 5 per cent of the world lithium market, and recent oversupply of lithium have led to industry speculation Rio may not be in a hurry to mine the giant deposit.
In Monday’s note Ord Minnett analysts said that, based on publicly available information, “we struggle to see how the project economics stack up”.
“We estimate a paltry internal rate of return of about 10 per cent for the $US1.5bn project, which includes some generous assumptions around grade and recoveries,” they note said.
“Considering the significant capital cost, low recoveries, unknown jurisdiction (Serbia) and no real synergies with its existing Boron operations, we don’t believe the project should proceed.”
Separately, Mr Baatar said Rio has joined fellow mineral sands major Iluka Resources in seeking to monetise waste from its mineral sands operations and join the rare earth space at the same time, by exporting a rare earth-bearing ore — monazite — from its mineral sands operations in Madagascar.
Iluka is already planning to ship a monazite concentrate from its former Eneabba operations in WA, with the $10m project to reprocess tailings waste likely to begin shipping by the middle of 2020.
Rio shares gained $1.31 to close at $89.43 on Tuesday, with Ioneer closing even at 19c.
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