rio tinto (ASX:Rio) Plans to invest $2.5 billion in the Rincon lithium project in Argentina.

The goal is to increase Rincon’s production capacity to 60,000 tonnes per year of battery-grade lithium carbonate. The project will combine a 3,000 ton starter plant with a newly constructed 57,000 ton expansion facility. This development will give the mine a useful life of approximately 40 years.

Construction of the expansion facility is expected to begin in mid-2025, subject to permitting, with first production targeted for 2028. It is expected to take three years to ramp up to full capacity and promises significant job creation and economic benefits for the surrounding area. .

The announcement follows news that the company, along with BHP, is facing a potential class action lawsuit alleging widespread and systematic sexual harassment at mining sites in Australia.

Direct extraction of lithium

Rincon uses direct extraction of lithium. DLE is a non-evaporative method. Lithium is separated directly from brine using chemical processes, ion exchange resins, or adsorption. This process is in contrast to the more traditional evaporation pond method, which relies on solar evaporation to concentrate lithium over months or years.

DLE is considered more sustainable than vapor deposition because it also produces higher concentrations of lithium carbonate. However, it is relatively new in terms of large-scale production, and some analysts have expressed caution. Its commercial implementation is still in its early stages.

Rincon and Rio

Rincon is located in Argentina’s “Lithium Triangle”. The project’s ore reserves are now 60% higher than originally estimated at the time of Rio’s acquisition of Rincon.

Rio Tinto CEO Jakob Stausholm highlighted that the project is consistent with Rio’s ambition to become a leading lithium producer at the “lower end of the cost curve”. He added that the company’s DLE approach cuts water usage in processing by half.

The investment is in line with Argentina’s efforts to become a leader in lithium. Argentina’s economic reforms and the introduction of the Large Investment Incentive System (RIGI) provide a favorable environment. RIGI offers benefits such as reduced tax rates, accelerated depreciation, and 30 years of regulatory stability, protecting projects from future policy changes.

Rio stock closed 2.76% lower at $120.72 on Friday.