Rio Tinto's Chile deal is a bet on unproven tech and lithium price bounce
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.
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 lithium is challenging."
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.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
The Guardian
2 hours ago
- The Guardian
Positives and negatives: is it better to learn to drive in an electric or a petrol vehicle?
Not long ago, the choice was between manual and automatic. One, demanding mastery of gear stick, accelerator and clutch – greater control at the risk of stalling – the other offering a simpler ride. These days the debate has moved on. The majority of new cars are automatic and an increasing share are electric. New data from the Electric Vehicle Council shows sales of electric vehicles continue to climb in Australia, with 12% of new sales between January and June being battery electric or plug-in hybrids – up from 9.6% in the same period last year. As a new generation approaches their Ls and Ps, a new dilemma arises – is it better to learn in an electric or a petrol vehicle? There are now 350,000 electric cars on Australian roads, says the Electric Vehicle Council's chief executive, Julie Delvecchio. Of those, about 43% are driven in outer suburban Sydney, Melbourne and Brisbane – often households with solar panels, off-street parking and longer commutes – and 18% in the regions, she says. 'Given that the future of driving is electric, it just makes sense that we'd be teaching our kids on the cars that they'll be actually using in the years ahead.' In most states, learners can drive any light car, so long as they are supervised by someone with a full Australian drivers licence. Once on their probationary licence – in New South Wales, Victoria, Queensland, South Australia – young drivers are banned from getting behind the wheel of anything classed as a high-powered vehicle. The restriction applies to any vehicle with a power-to-weight ratio higher than 130 kilowatts per tonne, which rules out some popular electric models like Tesla's Model Y, according to EV Central. When it comes to motorcycles, many states still require learners to start with a petrol vehicle, says Dr Chris Jones, president of the Australian Electric Vehicle Association. 'If you're going to learn how to ride a motorcycle and you want to get your open bike license – which means unrestricted power-to-weight – you do need to do that on a petrol bike with gears and a clutch. You can't do that on an EV motorcycle,' he says. Students can take their test in an electric car, according to state and territory transport departments. Although restrictions on the use of driver support systems vary, so it's worth checking the rules for your state or territory beforehand. For example, in NSW driver support features such as self-parking, speed assist and cruise control must be turned off during the driving test, while in Queensland they can still be used. Some jurisdictions require the car to have a centre-mounted park brake – electric or lever – to be accessible from the front passenger seat. Tarik Menzies from No Yelling Driving School, who manages a fleet of driving instructors across Queensland and Victoria, says occasionally parents will request their child learns in a petrol car. For some it's about manual transmission, he says, a feature rarely found in electric vehicles. 'They think their child learning manual is a useful skill – like doing maths without the calculator.' Learning in a manual is increasingly uncommon, however. Transport for NSW data shows in 2024 the number of manual driving tests (28,392) was a 10th of those testing for automatic (289,426). Others are not yet ready for the change in technology, Menzies says. Even though when it comes to automatic cars, there's very little difference between learning in an electric versus a petrol car. Kathryn Collier, who manages METEC Driver Training, says there's a couple of small differences for learners to be aware of. Electric cars often have better torque, and can be quicker off the mark, she says. 'Also be aware that your car may well be silent. So be extra vigilant in looking out for vulnerable road users like pedestrians and cyclists because they won't hear you.' The road safety organisation, which provides school driver programs for more than 80 schools in Melbourne and Victoria, has a range of vehicles for students to learn in, including a Nissan Leaf, to give young people the experience of driving an electric vehicle. Parents switching to a shiny new electric car might be tempted to hold on to their older model for their teenagers to learn in. But Collier recommends young drivers learn in 'the safest car you can afford', ideally one with a five-star Ancap rating. 'A lot of young people tend to get the hand-me-down vehicles from other members of the family,' she says. 'We would argue that the most vulnerable driver should really be in the safest car possible.' Jones says the learning process is a good opportunity to share tips about the 'non-driving bits' of driving an EV – how to use a public charger, charging etiquette and scheduling your home charging to make the most of cheap energy. 'In our experience learner drivers (and drivers generally) adapt pretty quickly when it comes to EVs', the Electric Vehicle Council's Julie Delvecchio says. 'Often, once they get in an EV … they never want to go back to petrol and diesel, because it's so smooth, so quiet and easy to drive.' Regardless of what car they learn in, Menzies says learning to drive is an empowering experience for most young people. 'We see the joy that it brings, as well as the disappointment when they fail.' 'In our culture, getting your licence is somewhat of a right of passage for the young person becoming a big person.' Your contact details are helpful so we can contact you for more information. They will only be seen by the Guardian. Your contact details are helpful so we can contact you for more information. They will only be seen by the Guardian.
Telegraph
12 hours ago
- Telegraph
Heavy lorries are the next giant domino to fall for big oil
Mike Nakrani has spent a large part of his energy career striving to turn hydrogen hope into commercial reality. Nobody could have tried harder. He led a joint venture between Daimler, Ford, and Ballard Power to develop fuel cells for heavy-duty trucks. He was in charge of BP's hydrogen operations. But the pace was glacial and rival battery technology for electric vehicles was vaulting ahead. Like many on the energy front-line, he has reached the clear-headed conclusion that hydrogen will never have a role in the world's transport system, beyond a few specialist niches. Hydrogen vehicles cannot come close to paying their way. 'I bow to the laws of physics,' he said. 'Storing hydrogen is incredibly difficult, transporting it is even harder, and dispensing it is also damned hard. Anything mobile is going to run off electricity.' Mr Nakrani is today leading the UK's push into electric lorries and buses as chief executive of VEV, a Vitol-backed venture in Teesside, the birthplace of the world's heavy industry now relaunching itself as the world's first decarbonised industrial cluster. The cost of hydrogen is prohibitive unless it is the 'grey' variety from fossil fuels – in which case, why bother? – and you lose three quarters of the energy before you start. Putting power directly into an electric vehicle is three times more efficient. The hydrogen car flop has been spectacular, though Japan is hanging on. 'They say there are more hydrogen fuelling stations in Tokyo than Toyota Mirais,' he said. A grand total of 12,866 hydrogen cars were sold across the planet last year. Sales of electric vehicles (EVs) topped 17 million and are on track to blow through 20 million this year. Mr Nakrani says the myths die hard. 'First we thought electrification was just for city cars, and then it moved to family cars, and then to SUVs, vans, buses, and now to 40-ton trucks,' he said. Vested interests have dug in their heels at every stage, fostering a narrative that EVs would never cope with heavier loads. They continue to push the line that big trucks will always need molecules, whether diesel, liquefied natural gas (LNG), or hydrogen. Too many politicians have been gulled into believing them. 'There were already 50,000 heavy electric trucks of 40 tons-plus running around in China last time I looked,' said Mr Nakrani. Disbelief and disinformation are as old as the hills. The Tees Valley had a taste in the early 1820s when the old guard tried every trick to stop the Stockton and Darlington railway. Lord Darlington blocked the enabling bill, saying it would scare away foxes and spoil the hunt. Petitions were submitted warning that women would die from asphyxiation travelling at 20 mph, or that it would take land needed to grow food. Canal owners stoked the fears, and with reason: railways would destroy them. The Institute for Energy Economics and Financial Analysis says the life-cycle cost of heavy e-trucks in China is roughly 15pc lower than for diesel trucks. The chief growth is along 'freight corridors' linking 16 Chinese cities, increasingly using instant battery swap stations along the way instead of charging. The new energy giant CATL is offering a standardised swapping battery known as '75#' that works for 30 different heavy-truck models. E-truck sales are going parabolic as costs plummet and ranges keep lengthening. They captured 22pc of the Chinese heavy-duty market in the first half of this year, up from 8.6pc over the same period last year. IEEFA expects the share to reach 50-80pc by 2028. If anything like that happens, it will be the next crashing domino for big oil. E-trucks are also killing the short-lived boom for LNG-powered haulage in China. Commercial trucks consume 16 million barrels a day of oil (b/d) worldwide, or a sixth of global oil demand. The Rhodium Group estimates that EVs of all kinds have so far displaced one million b/d. This will rise to 1.6 million over the next 12 months. Diesel use in China peaked in 2023 and has since fallen from 4.7 to 4.0 million b/d. Replacing legacy fleets takes time, but China's galloping electrification already explains why the International Energy Agency (IEA) keeps cutting its forecast for global oil demand. Events could now move much faster than even the IEA expects. Britain is a laboratory test case. If e-trucks can reach cost parity with diesel even with Ed Miliband's electricity tariffs, they can do so anywhere. The price of power is the key variable and UK power is among the most expensive in the world. That is a long-standing failure of state policy. The Energy Secretary has chosen to make matters even worse. Mr Nakrani has just run a trial for AV Dawson's, Tata Steel, and British Steel at the port of Middlesbrough, using a 42-ton MAN electric lorry with a 310-mile range to haul steel and supplies on standard routes across the region. All three companies deem it a roaring success. It cut CO2 tail-pipe emissions by 2.3 tonnes from a single truck in 10 days at an implied life-cycle cost that roughly matches a diesel equivalent. 'The fleet manager was ecstatic,' he said. 'It worked for every journey.' E-trucks cost two to three times as much to buy – though the gap is closing fast, as it did for EVs – but you recoup on lower running costs. The cheaper the electricity, the sooner the crossover point. 'In Finland, electricity is so cheap it takes 10 months,' said Michael Liebreich, founder of Bloomberg New Energy Finance and a director of PragmaCharge, which is electrifying heavy-goods fleets, ports, and terminals in Europe. Eurostat figures show that average power prices per kWh for non-household consumers in late 2024 were: Finland €0.08, Sweden €0.09, Denmark €0.12, Spain €0.14, France €0.18, Italy €0.22 and Germany €0.23. The UK was nearer €0.32. That is not because the UK is greener. It is because the UK is incompetent. Fossil fuels are down to 10pc in Denmark's grid. Finland has almost none at all. PragmaCharge is launching in Finland, Spain, and the German-Polish freight corridor. 'We are delivering electrified heavy freight at a lower cost than diesel, without subsidies, across Europe. Customers are lining up,' said Mr Liebreich. Germany has introduced a CO2-based toll charge for diesel trucks equal to €200 a ton that will accelerate the process even faster. The switch is now unstoppable. So it is not just China. It is Europe too, and Vietnam, Thailand, Brazil and a clutch of other states, responding in the same way to the same price signal. There are already 45 electric truck models on the market in India. We now know that global sales of combustion-engine cars peaked in absolute numbers in 2017 and have never since recovered. Almost nobody realised that it was happening at the time. Could it be that fossil truck sales are peaking in the same way right now? If so, 40pc of world oil demand is already going into terminal run-off. Just Stop Oil can call off their protests. Technology is stopping oil more dramatically than they could ever achieve.
Reuters
15 hours ago
- Reuters
Forestry giant Copec's profit dips as revenue beats forecasts
Aug 14 (Reuters) - Chilean industrial conglomerate Empresas Copec ( opens new tab on Thursday posted an 21% drop in second-quarter profit although revenue surpassed expectations, as the forestry giant faces falling pulp prices and impacts from the U.S.-China trade war. Net profit for the three months ended June hit $228 million - in line with forecasts of analysts polled by LSEG - from revenue that edged down 1% to $7.18 billion. However, revenue for Copec, which owns a large forestry business as well as fuel distribution, mining and fishing operations, landed ahead of analysts' $6.84 billion estimate. Copec attributed the decline in sales largely to lower prices for pulp - a raw material used in a range of products such as paper, packaging and some textiles - though it partially offset this by selling off larger volumes. Copec said China faced an oversupply of pulp even though domestic consumption and demand remained strong, while in Europe, an oversupply had combined with a lower use of "almost all grades of paper", causing some paper mills to shut down. "The dissolving pulp market has been affected by the trade war between the United States, China, and other Asian textile-producing countries," it added. Copec said its forestry subsidiary Arauco sold nearly 8% more pulp compared to the same quarter last year, but prices were down more than 12%. Arauco contributes the bulk of earnings for Copec, which last year counted over 9,360 square km (3,614 square miles) of land planted mainly with eucalyptus and pine forests across Brazil and South America's Southern Cone - an area larger than the U.S. territory of Puerto Rico. Washington has slapped a 50% tariff on goods from Brazil, but excluded some major exports, including various types of wood pulp, sawn wood and paper products.
