Anglo-Australian mining company Rio Tinto has signed an agreement with Rincon Mining to acquire the Rincon lithium project for $825m.

Located in the lithium triangle in the Salta Province of Argentina, Rincon is a large undeveloped lithium brine project.

The Rincon lithium project is said to be a long life, scaleable resource that is capable of producing battery grade lithium carbonate.

The acquisition is part of Rio Tinto’s efforts to build its battery materials business. In July this year, the company announced to invest $2.4bn to develop the Jadar lithium-borates project in Serbia to serve the European electric vehicles market.

Rio Tinto chief executive Jakob Stausholm said: “This acquisition is strongly aligned with our strategy to prioritise growth capital in commodities that support decarbonisation and to continue to deliver attractive returns to shareholders.

“The Rincon project holds the potential to deliver a significant new supply of battery-grade lithium carbonate, to capture the opportunity offered by the rising demand driven by the global energy transition.

“It is expected to be a long life, low-cost asset that will continue to build the strength of our Battery Materials portfolio, with our combined lithium assets spanning the US, Europe and South America.”

The lithium project is owned by Rincon Mining, a company owned by funds managed by the private equity group Sentient Equity Partners.

Upon completion of the transaction, the project will be subject to the completion of studies to confirm the resource.

Rio Tinto is expected to undertake the work required to assess the development strategy and timing, and to obtain updates to existing Environmental Impact Assessment Permits for the development and production.

The Rincon project is proposed to utilise the direct lithium extraction technology, which is said to have the potential to increase lithium recoveries as compared to solar evaporation ponds.

The transaction is expected to be closed in the first half of 2022, subject to approval by Australia’s Foreign Investment Review Board (FIRB).