Power Up-Rio's Lithium Power Play
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by Andy Home, Senior Metals Columnist.
In today’s issue we look at Rio Tinto’s swoop on Arcadium Lithium. The deal will create the world’s third largest producer of a metal at the core of the energy transition.
Also in today’s issue, why U.S. electric vehicle sales growth is at risk from a lack of charging infrastructure, the first consecutive falls in India’s coal-fired power generation since the pandemic and the growing number of cyberattacks on Nordic utilities.
Rio Tinto’s Lithium Power Play
Rio Tinto has agreed to buy U.S. based Arcadium Lithium for $6.7 billion in a mega deal that will catapult it to becoming the world's third largest miner of the battery metal.
It’s a big bet on the lithium market. Prices have bombed over the last year as new supply has coincided with a slowdown in sales of electric vehicles, the largest demand driver for lithium-ion batteries.
Many Western lithium producers have curtailed production and deferred new projects, stoking geopolitical tensions between the United States and China.
Jose Fernandez, undersecretary for economic growth, energy and the environment at the U.S. Department of State, did not mince his words at a press briefing in Lisbon, accusing China of flooding the market with lithium to force competitors out of business.
Rio is clearly taking the view that the market is near a floor and that the world is still going to need a lot more lithium to meet global emissions targets.
It’s not the company’s first lithium move. Rio is sitting on a huge deposit in Serbia but struggling to win over a sceptical public that it can mine the green metal in a fittingly green way. Even if local opposition can be overcome, development of the Jadar mine is at least a couple of years away.
Meanwhile, Rio’s Rincon project in Argentina, bought in 2022 for $825 million, has yet to enter production.
The Arcadium deal gives Rio an enticing portfolio of active mines, lithium deposits filled with decades of supply, and some of the industry's most advanced processing facilities. The jewel in the crown, though, is Arcadium’s direct lithium extraction (DLE) technology, widely expected to revolutionise the way lithium is produced in future.
Lots of background on DLE here, the world’s top lithium producers here and the complex history of Arcadium here.
ESSENTIAL READING
U.S. sales of electric vehicles have soared by over 140% since the start of 2023, but installations of public charging stations have increased by just 22% over the same period. Energy transition columnist Gavin Maguire runs the numbers and warns that the slow pace of build-out threatens future growth in the EV sector.
U.S. gas-fired power generation hit new highs over the first nine months of this year, cementing the country’s status as the world’s biggest driver of natural gas consumption. And, as Gavin Maguire writes here, the trend is set to continue in the coming years, undermining the country’s credibility as a potential leader in the energy transition.
India’s coal-fired power output fell for a second straight month in September on an annual basis, breaking a long-running uptrend. Sudarshan Varadhan and Gabrielle Ng in Singapore examine the shifting fuel use patterns in the world's fastest growing major economy and third-largest greenhouse gas emitter.
India’s Adani Group plans to build 10 gigawatts of overseas hydroelectric projects over the next few years, helping the conglomerate reach its net zero carbon emissions goal by 2050. Sethuraman NR in New Delhi has the lowdown on Adani’s hydro ambitions.
Nordic utility Fortum is facing daily cyberattacks at facilities in both Finland and Sweden, the company’s CEO Markus Rauramo told Reuters in an exclusive interview.
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Editing by Barbara Lewis
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