By Divya Rajagopal
TORONTO (Reuters) - Demand for key-battery mineral lithium will continue to grow, underpinned by strong adoption of electric vehicles but the price of the metal is expected to be volatile, Rio Tinto (NYSE:RIO) CEO Jakob Stausholm said on Sunday.
Still, Stausholm said Rio will steer clear of making any big ticket acquisitions to grow its lithium business and instead look at ways to improve the lithium extraction technology.
Rio Tinto, the world's biggest iron ore producer, is one of the few large mining companies betting on lithium even as counterparts such as BHP stay away from investing in the metal, which is used in developing EV batteries.
Softening EV demand has knocked down lithium prices, with a basket tracked by Benchmark Mineral Intelligence plunging more than 80% in the past 12 months. That has forced many producers to shutter production and cut jobs.
"We have taken a consistent view that prices of battery materials will be volatile," Stausholm told Reuters on the sidelines of the annual Prospectors and Developers Association of Canada (PDAC) conference in Toronto.
PDAC, which runs Sunday to Wednesday, is one of the world's largest gatherings of mining companies and their financiers.
"Ideally, you will need more battery capacity, so it's not just batteries for EVs but also stationary batteries. So the world will have more batteries, I have no doubt about that. And therefore you need more lithium," Stausholm added.
Rio Tinto is developing the Rincon project, a lithium-brine mine in Argentina where it plans to develop a battery-grade lithium carbonate plant with an annual capacity of 3,000 tonnes. Production is expected to start by the end of 2024.
Argentina has the world's largest share of salt lake lithium resources.
The company also owns the Jadar lithium project in Serbia, which is currently under dispute after Serbia in 2022 revoked the license for the project over environmental issues.
Earlier, Stausholm told the PDAC conference that inflation in Western countries will moderate this year, which should help companies to stabilize costs.