Lithium remains king among battery metals, according to Rio Tinto's optimistic predictions
Rio Tinto, a global mining powerhouse, remains optimistic about the long-term outlook for lithium, a key battery metal. The company believes that lithium will retain its crown as the dominant battery metal in a fast-changing landscape.
The electric vehicle (EV) sector is in robust health, and lithium use in energy storage systems is growing even faster. Last year, sales of new energy vehicles rose by 25%, and in the first quarter of 2025, they were up by 29%. This surge in EV sales has led to a significant increase in lithium demand. In 2023, the increase was equivalent to the size of the entire global market in 2018.
Global lithium production grew by over 35% year-on-year in 2024, but despite this increase, lithium hydroxide prices have collapsed by 90% from their 2022 peak and show no signs of recovery. This price drop has affected multiple lithium producers, including Albemarle, the world's largest lithium producer, which has been cutting costs and deferring new projects to weather the supply storm. Even giants like Rio Tinto have been operating at zero or negative margins.
However, Rio Tinto is not deterred. The company is partnering with Chilean state entities on two lithium projects and recently acquired U.S.-based lithium producer Arcadium for $6.7 billion. With this acquisition, Rio Tinto became the owner of major lithium assets such as Fénix, Sal de Vida, and Olaroz. The company name remained Rio Tinto.
The International Energy Agency (IEA) estimates global lithium demand grew by 30% last year, and Rio Tinto expects this trend to continue. The company anticipates lithium demand to grow at a compound annual rate of over 10% through 2040. Rio Tinto believes that demand will be strong enough to absorb the current excess and pull the lithium market into deficit around the turn of the decade.
Despite the challenges, Rio Tinto remains bullish on lithium. The company's optimism is based on the continued growth of the EV sector and the essential role lithium plays in powering these vehicles. As the world moves towards a more sustainable future, lithium is expected to remain the dominant battery metal.
