- Rio hasn’t given up on its Jadar lithium mine, almost one year after it was halted by the Serbian Government and community opposition
- Rio’s Simandou iron ore development could be approved in the first half of 2023, says Goldman Sachs
- A bunch of news from majors and mid-caps at materials stocks lift slightly
After the massive publicity hit it took in Serbia on plans to develop the Jadar lithium mine, which saw its base permit pulled by authorities there facing major protests in the midst of an election cycle, you’d think Rio Tinto (ASX:RIO) may have tired of the struggle.
But speaking to analysts in Sydney yesterday, Rio’s top brass say the mine is still on its radar, with CEO Jakob Stausholm arguing “Europe needs it” and “Serbias needs it for its development”.
Make no bones, Jadar is a potentially massive operation, at least on Rio’s official numbers.
The deposit — which contains a mineral called jadarite considered similar in composition to Superman’s fictional kryptonite — would cost US$2.4 billion to develop. The mine in Loznica, 140km west of Belgrade, would produce 58,000t of lithium carbonate, 160,000t of boric acid and 255,000t of sodium sulphate a year.
Initially the planned opening date was 2026, though that is surely unattainable now, if opening the mine ever is.
Serbian PM Ana Brnabic told local media earlier this week she saw no chance of the the Rio project being revived.
Rio remains committed to Jadar, though it has since begun work on a more palatable Argentinian brine project at Rincon which it bought for US$825m earlier this year.
“One of the things I’m really clear on with Jadar, it is a fantastic ore-body, as Jakob said. It’s on the edge of Europe. It’s needed,” Rio’s chief executive of minerals Sinead Kaufman said.
“We spent 20 years between finding Jadar through our exploration team, finding a way to process this unique mineral, figuring out a way to manage water to the highest of standards, dry stack tailings, underground mine with very low footprint on surface, no surface expression of the underground mine at all except for the facilities on top.”
She says Rio “never actually told that story in Serbia” thanks to the specifics of the approvals process.
“We haven’t given up. But we fully respect the Serbian government’s position on it at the moment,” she added.
Rio into critical minerals, growing iron ore
Rio’s lithium ambitions have been well covered in these columns, along with its conviction in the growth profile of the lithium and EV market.
It thinks lithium demand will rise 4-7 times by 2030, placing pressure on general analyst expectations the market will enter a period of oversupply later this decade.
But its belief in other battery metals including copper and nickel, the latter of which it doesn’t currently produce, is also strong.
At Resolution in the United States, partners Rio (55%) and BHP (45%) have been working for years to get support from First Nations groups since beginning the permitting process in 2013 for a mine expected to service 25% of US copper demand.
Chief technical officer Mark Davies says the US is going to be extremely short on copper in the coming years, at a time when it is aiming to move away from external critical mineral supply chains.
“The society, the US needs it desperately,” Davies said.
“In the US, you’ve got 1 million tonnes of production, but the consumption is 2 million tonnes.
“With the current plans, at the end of this decade, the US will consume 4 million tonnes, but still producing one, unless they start unlocking new copper deposits.”
Over in the world of Rio’s main game, the iron ore business, it continues to discuss plans to ramp up its Pilbara operations over time to 360Mtpa (though its guidance for 2023 remains unchanged at 320-335Mt).
Rio’s iron ore boss Simon Trott says a series of new mines will need to be developed by 2025-2027 to hit the 345-360Mtpa range, with the massive and high grade Rhodes Ridge JV with Wright Prospecting at the centre of it.
Less was said about the Simandou mine in Guinea, though Goldman Sachs analysts Paul Young, Hugo Nicolaci and Caleb Heiner have put their own forecasts around it, saying it could be approved in the first half of 2023.
The development hinges on an infrastructure deal that would see Rio share port and rail networks for the deposit with the Chinese-backed owners of the other blocks and the Guinean Government.
“The Simandou iron ore project in Guinea should be approved by the JV in 1H23 and is on track for first production in 2026 with capex of US$4-4.5bn (RIO’s share), and production of 60-70Mtpa for the first phase of the port using trans-shipping; all in-line with GSe modeling,” GS analysts, who have a buy recommendation on Rio, say.
At its investor day in London, Rio said it had US$4b in capex outlined for Simandou for 2023-2025 including some capital in 2023, but described it as its most uncertain capital allocation.
Rio Tinto (ASX:RIO) share price today:
What is going on in the markets today?
Materials stocks are up slightly, led by Rio and BHP, after iron ore prices pierced the US$110/t milestone, despite falls across other commodities in response to weak November Chinese economic data.
But there is plenty of news down the totem pole.
Red 5 (ASX:RED), which is surely keeping a close watch on the Hoover House tie-up announced earlier this week between Genesis Minerals (ASX:GMD) and St Barbara (ASX:SBM), announced it had hit commercial production at the King of the Hills gold mine near Leonora.
The mine is expected to produce 90-105,000oz in the second half of FY2023 at an all in sustaining cost of $1750-1950/oz.
“We are now hitting the main ore body within the open pit and are seeing a very positive reconciliation of ore tonnes and grade against the mine plan,” RED MD Mark Williams said.
“The KOTH processing plant is also performing strongly, achieving an annualised throughput rate equivalent to 5Mtpa throughout most of November, and with several key enhancements now complete.”
Further afield geothermal lithium play Vulcan Energy (ASX:VUL) said it had received approval from the state authority in the Rheinland-Pfalz region of Germany for the operating plan for a demonstration plant for its Zero Carbon Lithium Project.
The company, which is aiming to hit commercial production with the novel extraction method by 2025, says a DFS is due in the first quarter of 2023 after operating a pilot plant for the past 20 months.
And at home Mineral Resources (ASX:MIN), already on a mission to mine just about every commodity under the sun, has lobbed a $403m all scrip takeover offer for Norwest Energy (ASX:NWE).
NWE is the junior JV partner in MinRes’ Lockyer Deep Perth Basin gas discovery, and MinRes already holds 19.9% of its register.
MinRes wants to use its own Lockyer Deep find and broader gas assets to supply cheap power to its iron ore, lithium and mining services operations in WA.
NWE’s board has recommended shareholders take no action on the bid, which has sent its share price soaring by 33.3% to the 6c offer price this morning.