Rio Tinto eyes Canada for lithium

Breadcrumb Trail Links Mining CEO says lithium to dominate market…


CEO says lithium to dominate market for EV battery metals

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Mining giant Rio Tinto Ltd. “would love” to produce lithium in Canada, given the right project, says chief executive Jakob Stausholm.

Rio doesn’t currently produce lithium, but Stausholm, speaking at one of the world’s largest mining conventions in Toronto on March 3, said the miner is keen on building a lithium business and is on the hunt for a top-tier property. He said he believes lithium is more likely to dominate the battery market in the future than other metals such as nickel and cobalt.

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Volatile market

“We would like to grow lithium, but what’s clear is that lithium is abundant in this world,” Stausholm said at the Prospectors & Developers Association of Canada convention. “And, therefore, you have seen a very volatile (market). Sometimes very high prices, and now prices have gone down so far.”

Lithium is expected to play a key role in the energy transition away from fossil fuels since it’s used to build batteries for electric vehicles (EVs). Several miners are exploring lithium projects in Canada, but there is just one major company — North American Lithium Inc., which is owned by Sayona Mining Ltd. and Piedmont Lithium Inc. — producing the mineral in the country.

The metal’s price rose manyfold in 2022 and early 2023 on the expected rise in EV demand. But prices have plummeted in the past year due to an increase in supplies, subdued Chinese demand and a poor EV market. The price of lithium carbonate is down more than 70 per cent from the same time last year.

Rio in 2023 dipped its toes into Canada’s lithium exploration industry by signing two agreements. In July, it signed an option agreement for about $115.7 million with Longueuil, Que.-based Azimut Exploration Inc., giving it the opportunity to own at least 75 per cent of the Corvet and Kaanaayaa lithium properties in the Eeyou Istchee James Bay region.

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An option agreement doesn’t necessarily mean Rio will own the properties, and the company must fulfil several conditions. For instance, to acquire 50 per cent of Azimut’s properties, Rio must spend at least $14 million over four years to explore the projects. To secure an additional 20 per cent, Rio will need to spend an additional $100 million over five years on exploration.

The deal allows the mining giant to spend a few million dollars to test the lithium projects owned by Azimut and assess the financial viability of building mines at the locations.

A month earlier, Rio inked a similar deal with Montreal-based Midland Exploration Inc. to explore 10 lithium properties in the James Bay region, covering a surface area of about 1,000 square kilometres.

Both deals come after Rio entered a memorandum of understanding with the federal government last year to look for ways in which the miner can contribute to Canada’s low-carbon battery industry over the next decade.

Cutting carbon emissions

Aside from the projects in Canada, Rio is actively trying to develop three other lithium projects in Argentina, Serbia and the United States. But lithium continues to be a relatively small segment of Rio’s business. It’s currently more focused on its aluminum and iron-ore businesses in Canada and has made a few investments recently to reduce its carbon emissions.

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For example, the company is trying to reduce the amount of heavy fuel oil consumed in the production of iron ore pellets and concentrates by installing an electric boiler in its Canadian operations.

In December, Rio also entered the aluminum recycling industry through a $700-million investment in Brampton, Ont.-based Matalco Inc. Producing secondary aluminum is more energy efficient than producing primary aluminum, but Stausholm believes the way forward is a combination of both.

In June, Rio announced it would invest $1.4 billion to expand its aluminum smelter in Quebec by adding new pots that it said would reduce its carbon emissions by 290,000 tonnes per year — equivalent to removing 63,000 vehicles from the road.

Despite these investments, Stausholm doesn’t think capital markets are properly rewarding companies focused on low-carbon strategies. However, he said the steps taken by Rio will create a difference in the coming decades, if not in the near future. Rio is trying to stay a step ahead of the game by “futureproofing” its assets, he said.

Stausholm said Canada is at least a decade ahead of other Western nations in terms of measures to reduce carbon emissions due to its reliance on hydropower. But he said he hasn’t seen a place where “people are so serious about addressing climate change like in China.”

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Nevertheless, Canada and the U.S. are looking to reduce their reliance on China for metals and other raw materials and pivot towards friendlier nations.

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In 2022, Canada prevented Chinese companies from investing in three lithium Canadian miners after it announced a policy that made it harder for “non-like-minded” nations to invest here.

Stausholm didn’t specifically comment on that issue, but said politicians serve their societies and companies serve the countries in which they operate, and “we are a global company” with major businesses in China and other nations.

• Email: nkarim@postmedia.com

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