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Market Cap £78.19bn
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RPT-COLUMN-Rio's lithium project will test mining's ESG credentials: Andy Home

Fri 30th July, 2021 2:00am
(Repeats July 29 column without change. The opinions expressed
here are those of the author, a columnist for Reuters)
    By Andy Home
    LONDON, July 29 (Reuters) - Rio Tinto's  RIO.L  decision to
invest $2.4 billion in developing the Jadar lithium mine in
Serbia is big news.*:nL4N2P33KJ
    For the company with its heavy exposure to the iron ore
sector, it's a major strategic pivot to the fast evolving
battery metals space.
    For the lithium market, it marks the first entry of a big
international mining company into what is a supply landscape
dominated by specialty incumbents.
    It's hugely significant for Serbia, which is trying to
attract investment to its mining sector, and it's hugely
important for the European Union, which has identified its
Balkan neighbour as a key link in its mineral securities chain.
    It's even a big geological first. The lithium will be
derived from a completely new mineral. 
    But the Jadar project will also be a big test of big
mining's green credentials. An online petition against the mine
has already garnered over 120,000 signatures, according to
Balkan Green Energy News. Serbia's president, Aleksandar Vucic,
has mooted the option of a referendum on whether it should go
    There's been a lot of talk about green, sustainable mining.
Rio is now going to have to convince a lot of local sceptics
that it's not just talk. 
    It's not often that geologists find a completely new mineral
in high concentrations but that's what Rio Tinto's team did in
Serbia's Jadar valley in 2004. 
    They were looking for borates and instead found
sodium-lithium-boron-silicate-hydroxide, or kryptonite for
    The formula for the fictional metal in the Superman series
is the closest match to the lithium-boron chemistry of the
Serbian find, a weird coincidence that occasioned a lot of media
coverage when the new mineral was officially recognised in 2007.
    Sadly for Superman fans everywhere, the International
Mineralogical Association went for "jadarite" after the location
of the find. 
    Rio doesn't seem to have known what to do with its superhero
find until the market for lithium, a previously specialty
chemicals business, was transformed by the metal's use in
electric vehicle (EV) batteries. 
    The Jadar kryptonite will generate 58,000 tonnes per year of
lithium carbonate once at full production in 2029, enough to
supply over one million electric vehicles, according to Rio. 
    It will also produce three times as much borates, an
important mineral input for both wind turbines and solar panels.
    However, the real significance of this new mineral pathway
to producing lithium - currently split between brine evaporation
and hard-rock spodumene - is the tantalising possibility of
other major jadarite finds. 
    The lithium market needs Jadar. 
    Low prices over 2019 and 2020 have left producers
ill-prepared for the sharp recovery in EV sales as the world
emerges from lockdown.
    Supply is now struggling to catch up with demand and lithium
prices have been on the rise.*:nL5N2O43WJ
    The global market should be broadly balanced this year but
will shift into a deficit of around 12,000 tonnes next year,
according to Will Adams, battery metals analyst at Fastmarkets,
explaining that "the restart of idle capacity has not been as
fast as we initially expected."
    That supply gap will only widen unless a lot of new projects
are funded soon, according to Adams. 
    Benchmark Mineral Intelligence analysts agree, calculating
the world could be short of 915,000 tonnes of lithium carbonate
equivalent in 2029 even allowing for Rio hitting full
    However, Rio might well accelerate a phase-two expansion of
the Jadar project, given "the strategy is usually more
aggressive once proof of production is achieved and the product
is accepted by battery and EV makers,", according to Benchmark's
managing director Simon Moores. 
    And there is the distinct possibility that Rio might expand
its battery metals footprint by snapping up smaller operators or
that other top-league miners do so as they too pivot away from
carbon products. 
    Before any of that happens, however, Rio has to get the
approvals to mine, including an environmental impact sign-off, a
process that will be open to public feedback. 
    Local environmental groups are already gearing up for battle
and although Serbia has historically been a mine-friendly
country, sustainability has risen rapidly up the agenda as it
has everywhere else. 
    China's Zijin Mining Corp was ordered to stop work on a
shaft at a copper mine in April after nearby residents
complained of noise. It was also ordered to complete a waste
water treatment plant and stop polluting the River Pek, a
tributary of the Danube.*:nL1N2M719N
    Which is not exactly a helpful local news story for anyone
planning a $2.4 billion mine and processing plant investment. 
    Rio is promising to build Jadar to "the highest
environmental standards". 
    There will be no wet tailings system with the associated
risk of dam collapses. Rather, tailings will be dried and
stacked, allowing the waste material to be progressively
reclaimed with vegetation and soil and eliminating the need for
a tailings dam. 
    "Water management will be state of the art with a dedicated
facility resulting in approximately 70% of raw water coming from
recycled sources or treated mine water," according to Rio, which
has already finalised 12 environmental studies and more than
23,000 biological, physical and chemical analyses of air and
    "We recognise that in progressing this project, we must
listen to and respect the views of all stakeholders," the
company said. 
    It's going to have to do a lot of listening, judging by the
rising petition count.
    The European Union, will be monitoring progress closely. 
    The bloc has identified public resistance to new mining and
metal projects as a major hurdle on the path to what it calls
"strategic autonomy" in critical minerals. 
    It's working on a new sustainable mining code but Jadar is
already shaping up to be a high-profile clash between the need
for more green metals and green resistance to more mining. 
    Rio comes to the fray with something of a tarnished
reputation after the destruction of the Juukan Gorge aboriginal
sites last year, an incident naturally highlighted by opponents
of the Jadar project. 
    The company's new chief executive Jakob Stausholm, appointed
in December, has committed to "strengthening the company's ESG
credentials and rebuilding trust".
    It will need to show it can deliver on those environmental,
social and governance pledges if its 2004 kryptonite find is to
become the super-mine the lithium market needs.  

 (Editing by David Evans)
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