SAGUENAY, Canada - Global mining company Rio Tinto (NYSE:RIO) is evaluating the feasibility of extracting gallium, a critical mineral, at its alumina refinery in Saguenay, Quebec. This initiative is part of an R&D program aimed at enhancing the North American supply chain for strategic minerals.
The company has announced plans to construct a demonstration plant in Saguenay, capable of producing up to 3.5 tonnes of gallium per year, should the initial technology development phase prove successful. The Government of Quebec has pledged up to C$7 million to support this demonstration phase. If scaled to a commercial level, the plant could potentially produce 40 tonnes of gallium annually, accounting for 5-10% of the current global production. This expansion aligns with Rio Tinto's robust operational efficiency, reflected in its healthy EBITDA of $19.64 billion and strong cash flows that adequately cover its moderate debt levels.
Gallium is integral to the manufacturing of integrated circuits, which are essential components in various advanced technologies such as smartphones, electric vehicles, and laptops. The development of this project is seen as a strategic move to bolster the supply of a mineral critical to numerous sectors.
Jérôme Pécresse, Chief Executive of Rio Tinto Aluminium, expressed gratitude for the Government of Quebec's significant financial commitment and emphasized the company's dedication to this pivotal project. Maïté Blanchette Vézina, Quebec's Minister of Natural Resources and Forestry, lauded the project's alignment with the government's vision for a circular and greener economy. The Honourable François-Philippe Champagne, Canada's Minister of Innovation, Science and Industry, highlighted the collaboration between the government and industry to position Canada as a global supplier of choice for critical minerals.
In North America, Rio Tinto already produces a variety of critical minerals, including scandium, tellurium, and molybdenum, used in diverse applications from aluminium alloys to solar panels and steel alloys. The company continues to explore the extraction of new materials from its operations as part of ongoing R&D initiatives.
This news is based on a press release statement from Rio Tinto.
In other recent news, mining behemoth Rio Tinto has announced a significant $2.5 billion investment in the Rincon lithium project in Argentina, marking a major move towards establishing its first large-scale lithium operation. The project, expected to have a production life of 40 years, is designed to produce 60,000 tonnes of battery-grade lithium carbonate annually. The first production is scheduled for 2028, with a gradual increase to full capacity over the next three years.
Moreover, Rio Tinto has recently completed the acquisition of Arcadium for $6.7 billion, enhancing the company's access to advanced lithium filtration technologies. This strategic acquisition aligns Rio Tinto with industry competitors such as Eramet (EPA:ERMT), Sunresin, and Exxon Mobil (NYSE:XOM). In addition, the company has extended its growth strategy plans for a 3% compound annual production growth until 2033, with a particular emphasis on lithium projects.
Analysts from various firms have given their take on Rio Tinto's recent developments. RBC (TSX:RY) Capital Markets reduced its price target for Rio Tinto but maintained a Sector Perform rating, while BMO (TSX:BMO) Capital maintained an Outperform rating. Berenberg upgraded the company's stock from Hold to Buy, citing reduced risks and strong diversification.
Unfortunately, a fatal incident occurred at Rio Tinto's SimFer port site in Morebaya, Guinea, leading to a temporary suspension of operations. Investigations are currently underway in collaboration with partners and local authorities. These are the recent developments concerning Rio Tinto.
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