Rio Tinto Upbeat on Lithium, Says Serbia Project Strategically Important
June 01 2016 - 5:25PM
Dow Jones News
By Rhiannon Hoyle
MELBOURNE, Australia--Rio Tinto PLC said a lithium deposit in
Serbia will be a strategically important project for the global
mining giant's minerals business, with executives expressing
enthusiasm on the outlook for the commodity some call "white
petroleum" for its use in lithium-ion batteries that power electric
cars.
Lithium prices have surged this year on expectations of rising
demand from companies such as Tesla Motors Inc., which is shaking
up the auto industry with its battery-operated cars. That has
sparked a race by explorers to fast-track drilling for lithium in
places such as Australia, and caused share prices for some of those
companies to rocket.
While several of Rio Tinto's large peers, including BHP Billiton
Ltd., have said the market is still likely to be too small to pique
their interest, the Anglo-Australian miner signaled it is eager to
develop its Jadar lithium-borate project.
"The Jadar project is strategically important for Rio Tinto
Minerals" and is shaping up to be "a very attractive investment in
Rio Tinto's project portfolio," Dean Gehring, chief executive of
Rio Tinto Minerals, said in a publication released by the company
on Thursday.
Rio Tinto has shown early signs of switching gears while many of
its peers continue to slim down during a broad commodities
downturn, having announced major new investments to increase output
of copper, an industrial metal, and bauxite, the raw material used
to make aluminum.
In February, Rio Tinto said it would spend a further $20 million
on studies to examine the Jadar deposit, where it had invested $70
million to-date and which Rio Tinto estimates could account for up
to 20% of annual global lithium supplies if mined. An initial study
aimed at building information on the deposit, located about 85
miles west of Belgrade, and working out whether it is financially
viable is expected to be completed next year.
Lithium carbonate prices rose 47% in the first quarter of the
year compared with the average price in 2015, according to data
provider Benchmark Mineral Intelligence.
Goldman Sachs estimates lithium demand could triple by 2025.
Alan Davies, head of Rio Tinto's broader diamonds and minerals
group, said the miner also projects high demand for lithium, which
could become a new market for the company that relies heavily on
iron ore for its profits. "The world will need a lot more lithium
in the future for electric cars," he said.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
June 01, 2016 17:10 ET (21:10 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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