Rio Tinto looks to lithium as EV market heats up

Rio Tinto looks set to focus on lithium, which is used in electric vehicle batteries, as it emerges as one of the only commodities to escape the decline in metals and fuel prices. Rio spokesman, Alan Davies, stated that Rio is already seeking strategic alliances with battery or car manufacturers to underpin the development of its Jadar lithium-borate project in Serbia. According to Sydney Morning Herald, Davies said “Lithium carbonate would be new for us, but the world will need a lot more lithium in the future for electric cars.” This news comes as lithium carbonate prices have climbed about 70% over the past two months to $10,000 a tonne, according to research by Citi published this week. Furthermore, analysts note that as demand for electric vehicle batteries grows, there is currently no new supply coming on stream within the next year. This comes as Tesla and LG Chem are in the process of building massive battery plants in the US and China, and, according to the Financial Times, Tesla has yet to announce a major lithium supply deal. Tesla will need about 24,000 tonnes of lithium hydroxide annually, according to Benchmark Mineral Intelligence, out of a market that last year produced 50,000 tonnes, so it seems there is definitely a gap to fill if Rio can deliver.

It's one of the world's hottest commodities, and now Rio Tinto wants to join the lithium party.

Prices for lithium are soaring as traditional demand from ceramics and glass manufacturers coincides with rising demand from lithium ion battery and electric vehicle manufacturers.

Rio Tinto is looking to the future with its interest in becoming a lithium miner.

Lithium prices rose from $US4900 ($6774) per tonne to $US5900 per tonne in the year to October 2015, and since then the price has almost doubled to $US10,000 per tonne.

Citi analyst Matthew Schembri​ said the onset of the northern winter had crimped production of lithium in China and duly created a shortage, and he predicted the price could continue rising over the next six months.