Rio Tinto CEO Jakob Stausholm, second from right, highlighted the diversified mining company's interest in investing in Canada, while speaking on a panel at the Prospectors & Developers Association of Canada conference in March. Source: S&P Global Commodity Insights. |
Rio Tinto Group has put Quebec in its crosshairs in the search for critical minerals amid a lithium frenzy in the Canadian province supercharged by North American green energy policies and recent exploration discoveries.
London-based Rio Tinto is among the few big diversified mining companies chasing lithium, an essential metal powering the global energy transition.
The agreements stand out in showing Rio Tinto's perseverance in squarely targeting early-stage lithium exploration and eventually getting a slice of the production pie. Rio Tinto is unique among the larger miners in spending on lithium exploration and development, and its annual exploration budget for the battery metal has been higher in the past three years than its annual budgets over the rest of the previous decade, according to S&P Global Market Intelligence data.
Rio Tinto's lithium exploration budget was $16 million in 2022, $31 million in 2021 and $15 million in 2020, Market Intelligence data shows. Otherwise, the most the company budgeted for lithium exploration in the past decade was $13 million in 2013.
The trend of outsized lithium interest looks set to hold, with Quebec playing an increasingly important role for Rio Tinto.
"The way we understand this move: It's extremely significant to see a company like Rio Tinto [come to Quebec]," said Jean-Marc Lulin, Azimut president and CEO. Lulin noted that Rio Tinto is typically interested in top-notch deposits where it can run a mine for at least a couple decades, adding, "There is a true lithium rush. We will see if we can convert good intent into discovery."
Big miner, big target
Rio Tinto's move bolsters the credibility of Quebec's growing sway as an up-and-coming destination for lithium discovery and production, according to industry experts, including Lulin, who is a geologist with decades of exploration experience.
Quebec has long been known to host lithium, and the province has drawn renewed interest in recent years with eye-catching discoveries of the battery metal, which have likely caught Rio Tinto's attention.
Patriot Battery Metals' latest drilling results included a highlight of 108 meters grading 2.44% lithium oxide, an intercept that continues to point to a deposit with wide and relatively strong concentrations of lithium, the company said July 10.
Fieldwork across much of Quebec is still on hold amid a flare-up of wildfires. Once Azimut is allowed back in the field, it will do an initial round of prospecting on the Rio Tinto earn-in targets and possibly start drilling within a few months, Lulin said.
"We are recognizing potential comparable to the geological context of Western Australia," Lulin said.
Production potential
Canada has so far been a minor player in the lithium sector, which otherwise remains a relatively small market for big miners. Australia and Chile are the sector's heavyweights, but as lithium demand grows on the back of EVs and grid battery storage, so too will the need to mine more lithium from places such as Quebec.
Australia is the top lithium-producing country, churning out 389,705 metric tons of lithium carbonate equivalent in 2022. Chile, ranked next on the list, produced 195,306 metric tons of lithium carbonate equivalent in 2022.
Another draw in Quebec is abundant, cheap and low-carbon hydropower, and a stable, pro-mining government, industry experts said. That puts Quebec in a strong position to feed projected lithium demand as North America plays catch up to China in battery and electric vehicle manufacturing and critical mineral production with the help of green energy policies, according to industry experts who underscored the impact of the US Inflation Reduction Act. The US law ties tax incentives for EVs to new sourcing rules that benefit free trade partners including Canada.
These benefits, along with Quebec's growing potential to feed North American lithium demand amid the unfolding energy transition, have drawn Rio Tinto to target Quebec lithium, Chris Berry, an independent analyst and president of House Mountain Partners, which focuses on critical minerals, said in an email.
"Quebec has had new life breathed into the lithium sector thanks to Patriot's success and the huge tailwind of the [Inflation Reduction Act]," Berry said, noting that Rio Tinto has faced hurdles in its attempts to develop lithium assets in other parts of the world.
The Serbian government revoked Rio Tinto's licenses for the Jadar lithium project in 2022. Meanwhile, Rio Tinto has shifted some of its focus to Argentina, where it hopes to develop the Salar del Rincon project.
"Rio Tinto has obviously had troubles in Serbia and it will be quite some time, in my opinion, before we see any sort of commercial production from their asset in Argentina," Berry said.
Rio Tinto did not respond to an emailed request for comment.
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