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Rio Tinto to spend $2.4bn developing lithium mines in Serbia

By Debabrata Das

06:10, 28 July 2021

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The Anglo-Australian mining company Rio Tinto said on Wednesday that it will spend US$2.4bn to develop the Jadar lithium-borates project in Serbia, one of the world’s largest greenfield lithium mining projects.

The miner’s shares dipped slightly on the Australian Securities Exchange (ASX) after the announcement, but the drop was less than the 0.66% fall of the S&P ASX 200. At the close of trade in Sydney, Rio Tinto’s shares were 0.11% lower than the previous close, at A$132.32 (US$97.22).

“The Jadar project would 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 company said.

First production 2021

Rio Tinto expects the Jadar project to create 2,100 jobs during construction and 1,000 mining and processing jobs once it starts production. First saleable production is expected in 2026 with a ramp-up to full production by 2029.

At full capacity, the mine will produce 58,000 tonnes of lithium carbonate, 160,000 tonnes of boric acid and 255,000 tonnes of sodium sulphate annually. Over the 40-year lifespan of the mine, Rio Tino will produce 2.3 million tonnes of lithium carbonate. The Jadar project will make Rio Tinto one of the top ten lithium producers in the world.

“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,” said Jakob Stausholm, Rio Tinto’s chief executive.

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EV sales drive lithium demand

The next steps for the project are seeking an exploitation licence and receiving regulatory consent. This includes approval of the environmental impact assessment (EIA) studies, which will be made available to the public shortly. The EIA is needed to start works, with construction targeted to start in 2022.

Australian mining companies have been eyeing increasing lithium production in Europe, which has fast become a hub for demand because of the electric vehicle sales in the region. Last week, Vulcan Energy signed a lithium offtake agreement for its project in Germany. According to the International Energy Agency’s forecasts, up to 185,000 tonnes of lithium will be required per year by 2030 to cater to the demand for electric vehicles.

Bumper dividend

Meanwhile, Rio Tinto announced that it will pay an interim dividend of US$5.61 per share to shareholders totalling US$9.1bn after it reported its highest ever interim profit. For the first half of 2021, the miner's underlying earnings hit US$12.2bn. Free cash flow generated by Rio Tinto in the first half of 2021 was US$10.2bn

"Government stimulus in response to ongoing COVID-19 pressures has driven strong demand for our products at a time of constrained supply resulting in a significant spike in most prices…This enabled us, despite operational challenges, to deliver record financial results," said Stausholm. 

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Read more: Australia’s Vulcan Energy signs lithium offtake agreement with LG Energy

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