Rio Tinto sees lithium output impacted by Argentina rainfall

Rio Tinto Group predicts lithium output for the year will fall, citing weather-related impacts in Argentina. Both the Olaroz project and the Fenix operation experienced reduced lithium production from brine ponds due to rainfall, according to the company's third quarter report released on Wednesday. Additionally, construction progress on their Sal de Vida brine project has been slower than anticipated.

As a key player in the lithium industry, Rio Tinto stands out as the sole diversified major miner with lithium assets, having acquired a significant producer in 2024. The market has been volatile in recent years due to fluctuations in expectations for electric vehicles and energy storage systems, along with supply uncertainties in production hubs like China and Zimbabwe.

This has caused prices to dip in recent weeks, with Goldman Sachs Group recently predicting a surplus of lithium over the next two years. Despite these challenges, Rio Tinto's lithium carbonate equivalent production is expected to reach approximately 61,000 tons in the year ending December 31, making it the second-largest producer globally.

However, outlooks for copper production and iron ore sales remain unchanged. While copper output remained steady in the third quarter, driven by strong performance at the Mongolian mine, shipments of iron ore rose marginally. Copper is a crucial component of Rio Tinto's strategy to capitalize on the growing demand for electrification in energy transition and data centers, accounting for over a third of the group's earnings in the first half of the year.

The company's Escondida mine in Chile saw a decline in production due to lower ore grades, a short shutdown, and severe weather, but this was partially offset by an increase from Mongolia's Oyu Tolgoi, where Rio Tinto is expanding underground operations. Rio Tinto's iron ore sales, the company's biggest source of earnings, rose three percent year-over-year to 90.8 million tons in the third quarter.

The firm is also finalizing a supply deal with China's state-backed iron ore buyer, China Mineral Resources Group Co., which aimed to negotiate on behalf of the steel industry. However, talks with China Mineral Resources Group have proven challenging for Rio Tinto's peers, including Fortescue Ltd. and BHP Group.