Rio Tinto Group RIO announced that it would invest $2.5 billion in its first commercial-scale lithium operation, the Rincon project, in Argentina. This move is in sync with Rio Tinto’s goal to build a world-class battery material portfolio.
Details on Rio Tinto’s Rincon Project
Rincon, a long-life asset, is designed to produce 60,000 tons of battery-grade lithium carbonate per year. This includes a 3,000-ton starter plant and a 57,000-ton expansion plant. The mine's ore reserves are 60% higher than what the company initially projected at the time of acquisition. It is expected to operate in the lowest quartile of the cost curve.
The project employs direct lithium extraction technology. The use of this process promotes water conservation, lowers waste and yields lithium carbonate more consistently than other processes.
Rio Tinto expects the mine life of Rincon to be 40 years. The mine's first production is scheduled for 2028, following a three-year ramp-up to full capacity. This is expected to result in major job creation and economic opportunity for local firms.
RIO’s Investment Aligns With Long-term Lithium Outlook
Being located in the heart of the ‘lithium triangle’ in Argentina, RIO’s investment aids Argentina’s goals to become a world-leading lithium producer.
The investment will benefit from Argentina's economic reforms and new Regime for Large Investment incentives. These incentives offer a favorable investment environment, featuring lower taxes, accelerated depreciation, 30-year regulatory stability and enhanced investor protections.
The attractive long-term outlook for lithium bodes well for the Rincon project.
Rio Tinto Stock’s Price Performance
In the past year, shares of Rio Tinto have lost 5.9% compared with the industry’s 7.3% decline.
Image Source: Zacks Investment Research
RIO’s Zacks Rank & Stocks to Consider
Rio Tinto currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the basic materials space are CF Industries Inc. CF, Carpenter Technology Corporation CRS and Ingevity Corporation NGVT. CF sports a Zacks Rank #1 (Strong Buy) at present, and CRS and NGVT carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CF Industries has an average trailing four-quarter earnings surprise of 10.3%. The Zacks Consensus Estimate for CF’s 2024 earnings is pegged at $6.32 per share. CF’s shares gained 20.6% in the last year.
Carpenter Technology has an average trailing four-quarter earnings surprise of 14.1%. The Zacks Consensus Estimate for CRS’s fiscal 2025 earnings is pegged at $6.61 per share. Its shares skyrocketed 162.7% in the last year.
Ingevity has an average trailing four-quarter earnings surprise of 95.4%. The Zacks Consensus Estimate for NGVT’s 2024 earnings is pegged at $2.55 per share. Its shares gained 25.7% in the last year.
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