Rio Tinto is rumoured to be increasing its exposure to the commodity amid the growing battery metals revolution.
Broker Stifel GMP has taken a closer look at potential lithium targets for the mining titan after Rio's acquisition in March of the Rincon lithium brine project in Argentina for $825 million and recent news that Serbian Prime Minister Ana Brnabic has announced seeing little chance of reviving the behemoth's $2.4 billion Jadar lithium project, on which licences were revoked earlier this year amid environmental protests.
"Under the US Inflation Reduction Act, 40/80% of battery critical metals must be sourced from the US or Free Trade Agreement Partner by 2024/2026, which include both Canada and Australia," highlighted Stifel analysts.
In mulling potential lithium company targets, Stifel analysts said they had focused on 'geographies' where Rio Tinto was already exposed (which could facilitate synergies) along with countries with Free Trade Agreements with the US.
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Rio has already been a beneficiary of Canada's Strategic Innovation Fund and is operating a pilot lithium concentration plant in Quebec, the analysts pointed out.
Its Rio Tinto Fer et Titane (RTFT) operations in Sorel-Tracy in the Canadian province are strategically located on the doorstep of Becancour, where "multiple battery material supply chain companies" have announced investments, they noted.
Rio's RTFT operation has also received a C$222 million investment from the Canadian Strategic Innovation Fund to support decarbonizing and has also started producing spodumene concentrate from ore from various lithium assets in Quebec and Australia.
Elsewhere in Quebec, Stifel analysts, among others, pointed to Sayona's Authier project as a potential target for Rio, and in Ontario, Frontier Lithium (TSX-V:FL, OTCQX:LITOF)'s Spark/PAK asset.
Meanwhile, in the Pilbara of Western Australia, the broker highlights the Kathleen Valley Resources' project and Core Lithium's producing Finniss project.
In the US, analysts pointed to Lithium Americas' Thacker Pass project and Cypress Development's Clayton Valley property.
Contact the writer at giles@proactiveinvestors.com