Rio Tinto's Chile deal is a bet on unproven tech and lithium price bounce
SANTIAGO (Reuters) - Global miner Rio Tinto will tackle one of the biggest technological challenges in the lithium industry as it takes the lead in Chile's first major project involving the battery metal in years, alongside state-run copper producer Codelco.
Maricunga marks a new pivot in Rio's lithium ambitions and a turning point for Chile, which will add a third project extracting the metal used in electric vehicles after decades of stagnation in the sector.
Rio will own just under half of the project, but will spearhead design, construction, operation and sales, Codelco announced on Monday.
A major challenge is deploying new technology, called direct lithium extraction, to separate lithium from salty brine liquid that is meant to be more environmentally friendly and efficient than conventional methods, industry experts say.
The method has yet to be proven widely in the industry and has never been used in Chile at commercial scale.
The technical challenge at Maricunga, one of the world's most lithium-rich salt flats, comes against a backdrop of uncertainty for lithium prices, which have fallen nearly 90% since late 2022 due to oversupply and weak demand for EVs.
"Scaling it in line with global demand timelines remains uncertain," said Nicole Porcile, a partner at mining consulting firm Anagea. "The ability to deliver at scale, efficiently and reliably will be a decisive factor in the project's competitiveness and investor confidence."
Rio has a DLE pilot plant at its Rincon project in Argentina, and recently acquired U.S.-based Arcadium, which employs a mix of DLE and traditional extraction methods.
That DLE know-how gave Rio an edge over three final competitors to partner with Codelco, said a person familiar with the deal. Still, Rio and Codelco must now hammer out which kind of DLE will work sustainably and effectively at Maricunga.
"That's certainly the goal: to develop and operate this in the most environmentally friendly manner possible because Codelco is well aware that they'll be under the microscope," the person said.
Codelco's search for a Maricunga investor attracted Middle Eastern, Chinese and Western companies, the person added. Construction is expected to start in three to five years, once environmental permits are updated.
Codelco has proposed a gradual transition to DLE, but Rio Tinto is aiming to use DLE from the start, with lower costs relative to other DLE projects, said a second person familiar with the matter.
ARGENTINA EXPERIENCE
Rio Tinto told Reuters its Argentina experience provided strong footing for future projects.
"We are therefore confident in the application of our technology to Maricunga and potentially to other lithium salt flats in Chile," a spokesperson said.
Rio will spend up to $900 million on the project. It is the only major mining company to bet heavily on lithium, accelerating its push with a second deal in six months at a time of low market prices.
"We have not heard from investors that they want to see further investment in lithium," said analysts at RBC Capital Markets in a note.
Rio is also in the running for Chile's Altoandinos lithium project controlled by state mining body ENAMI, which expects to announce a partner by the end of May.
The process is independent from Maricunga, in which Codelco hired investment bank Rothschild to scout for candidates.
Codelco, meanwhile, is set to soon close a deal to partner with Chile's SQM at the Atacama salt flat.
Benchmark Minerals analyst Federico Gay noted that Rio and Codelco will have to carefully prioritize. "Too many fronts (are) open for both companies, in a moment when justifying large investments for lithiumischallenging."
Rio Tinto, which could be granted an intellectual property permit if its DLE technology is used for the project, will hold a majority of seats on a technical committee with Codelco, and move to a 50-50 split once production begins, according to a filing with Chile's financial regulator.
(Reporting by Daina Beth Solomon in Santiago and Clara Denina in London; Editing by Rod Nickel)
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Inside the mine that feeds the tech world - and funds Congo's rebels
RUBAYA, Democratic Republic of Congo (Reuters) -Under the watchful eye of M23 rebels in the hills around the Congolese town of Rubaya, a line of men in rubber boots ferry sacks full of crushed rocks up winding paths cut into the slopes. The laborers are hauling coltan ore, a mineral that powers the modern world. The ore will be loaded onto motorbikes and eventually shipped thousands of kilometers away to Asia. There it's processed into tantalum, a heat-resistant metal that fetches more than $300 a kilogram and is in high demand by makers of mobile phones, computers, aerospace components and gas turbines. Rubaya produces around 15% of the world's coltan, all dug manually by impoverished locals who earn a few dollars per day. Control of this mine is the biggest prize in a long-running conflict in this central African nation. The area was seized in April 2024 by M23, a rebel group the United Nations says has plundered Rubaya's riches to help fund its insurgency, backed by the government of neighboring Rwanda. The heavily-armed rebels, whose stated aim is to overthrow the government in Kinshasa and ensure the safety of the Congolese Tutsi minority, captured even more mineral-rich territory in eastern Democratic Republic of Congo (DRC) this year. The region and its mineral wealth are in the spotlight as M23 and the DRC have pledged to sign a peace deal at a ceremony in Qatar's capital, Doha, this month. The United States is mediating parallel talks between Congo and Rwanda, dangling potentially billions of dollars in investment if hostilities cease. 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M23 was taking in $800,000 monthly from levies collected from coltan mining in eastern Congo, according to the December U.N. report. MUD AND MOTORBIKES Simply reaching Rubaya's sprawling, beehive-like maze of pits is a major undertaking. Reuters journalists who visited the mining sites in March had to abandon their four-wheel-drive Land Cruisers after the vehicles became stuck on the muddy road from Goma. They walked 5 kilometers (3 miles) to reach the town and then hopped on the back of motorcycles with rebel officials to reach the pits. Activity in Rubaya begins before dawn, when thousands of miners descend on the pits cut into the rolling hills of Congo's North Kivu province, where many toil in 12-hour shifts. The tunnels can be as deep as 15 meters (49 feet) underground. Once fragments of ore are dislodged, porters carry sacks of the rubble to the surface where laborers have dug shallow basins that are filled with water. There, other workers, including women and children, wash the ore and separate it from sand and other debris before laying it into the sun to dry. The journalists were supervised by unarmed M23 personnel throughout their visit to the mining area. A reporter saw a rebel official jotting down in a notebook how many sacks each porter – covered in a fine white dust – carted to each collection point. Once the ore is dry, it is stacked on the backs of motorbikes that carry it to one of several depots in the nearby town of Rubaya, where it is sold to traders. With a M23 chaperone listening, Pascal Mugisha Nsabimana, a 32-year-old miner, told Reuters that working under rebel occupation was preferable to toiling under the supervision of Congo's military and its allies, who fled when M23 moved in on the area last year. Previously 'there was too much harassment, there were many different taxes, and often we, the diggers, were not paid. And even if we got something, it was poorly paid,' the miner said. He added that his current day rate had at least tripled to 15,000 Congolese francs ($5.15) with M23 in charge. In the early months following M23's takeover of Rubaya in April 2024, smugglers used motorcycles to sneak the ore into Rwanda via backroads to avoid scrutiny by Congolese forces remaining along the border, according to more than a dozen people familiar with the situation, including current and former smugglers, miners and local businessmen. The journey could take an entire day, according to two ex-smugglers who transported coltan this way until last year. They said they loaded their bikes each trip with three 50-kilogram bags and were paid about $34 for delivering it to coltan traders. But alterations implemented by M23 have proven a game changer in terms of efficiency, nine of those people said. 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