Rio Tinto has entered into a binding agreement to acquire the Rincon lithium project in Argentina, an undeveloped brine project that, Rio says, has the potential to have one of the lowest carbon footprints in the industry and can help deliver on the company’s commitment to decarbonise its portfolio.

The agreement has been signed with Rincon Mining, a company owned by funds managed by the private equity group Sentient Equity Partners, for $825 million.

Rincon is in the heart of the lithium triangle in the Salta Province of Argentina, an emerging hub for greenfield projects. The project is a long life, scaleable resource capable of producing battery-grade lithium carbonate, according to Rio. The direct lithium extraction technology proposed for the project has the potential to significantly increase lithium recoveries as compared with solar evaporation ponds, according to the company. This process uses a resin to adsorb the lithium, with clean water used to wash off the lithium in desorption, and adsorption and desorption conducted with raw brine and water at ambient temperature to significantly reduce the energy consumption, Rincon says.

A pilot plant is currently running at the site and further work will focus on continuing to optimise the process and recoveries.

Rio Tinto Chief Executive, Jakob Stausholm, said: “This acquisition is strongly aligned with our strategy to prioritise growth capital in commodities that support decarbonisation and to continue to deliver attractive returns to shareholders. The Rincon project holds the potential to deliver a significant new supply of battery-grade lithium carbonate, to capture the opportunity offered by the rising demand driven by the global energy transition. It is expected to be a long life, low-cost asset that will continue to build the strength of our Battery Materials portfolio, with our combined lithium assets spanning the US, Europe and South America.”

Once acquired by Rio Tinto, the Rincon project will be subject to the completion of studies to confirm the resource and define an JORC Code compliant resource statement. Work will be undertaken to determine the development strategy and timing, secure updates to existing Environmental Impact Assessment permits to allow development and production, and undertake ongoing engagement with communities, the province of Salta and the Government of Argentina, the company said.

As the project is currently held through an Argentine branch of an Australian company, completion of the transaction is conditional upon approval by Australia’s Foreign Investment Review Board (FIRB). Subject to this FIRB approval, the transaction is expected to be completed in the first half of 2022.