Mining Giants downplay Net-Zero Industry, now racing to boost Lithium production

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The precipitous fall in Lithium prices has not dampened medium and long-term incentives, as the Lithium trend is both secular and irreversible.

However, multinational mining companies and a significant group of investors initially lagged behind. Since then, the strategies of major mining companies to engage in Lithium have been substantial.

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Rio Tinto

Rio Tinto has resolved to become a major Lithium producer. In this regard, it paid USD 850 million at the end of 2021 for the Salar Rincón project in Argentina's Salta province. In January 2024, Salta province granted the socio-environmental permit for a Lithium carbonate processing plant with an initial capacity of 3,000 tonnes per year, potentially scalable to 20,000 tonnes per year.‍

Glencore

Mining giant Glencore has announced its ambition to become one of the largest Lithium producers in the coming years. In addition to being the second-largest partner of Li Cycle Holding (a recycling company), the company made its first investment in a Lithium mine through Tantalex. The Swiss miner will hold 30% of the company for a project in the Democratic Republic of the Congo (DRC).

Anglo American

Anglo American has indicated it is actively seeking Lithium procurement deals. "We don’t have a Lithium mine, but we are looking for Lithium," stated Paul Ward, head of base metals, in late December 2023.

Vale S.A.

"Brazil will become a global Lithium powerhouse," declared an executive of Vale S.A., following the South American country's opening of its market this year.

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What causes Lithium price volatility?

One reason mining giants hesitate to enter the Lithium market is the suspicion that price volatility is due to its highly speculative nature.

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Moreover, Lithium market dynamics are influenced by geopolitical decisions (such as the IRA Law in the USA), which can distort any price forecasts.

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Short-term Lithium prices are volatile because it is produced in limited quantities, raising fears of supply interruptions and leading countries like China to accumulate excessive inventories.

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No industrial-scale project currently exists worldwide that uses Direct Lithium Extraction (DLE), despite numerous startups claiming to have a solution. News of supposed breakthroughs causes their stock valuations to rise.

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These giants should consider that their large-scale processing capabilities have become obsolete; Lithium represents a battle of technological innovations.

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Perhaps they should pay attention to the leaders at the forefront of the energy paradigm's turning point. After all, as Warren Buffett said,

"The risk comes from not knowing what you're doing."

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