Key Highlights

  • Rio Tinto produced 13.0 thousand tonnes of lithium carbonate equivalent in the third quarter of 2026.
  • Nine-month production rose 33%.
  • Full-year output is expected at the low end of the 61–64 thousand tonne range.
  • Fenix is progressing well, while Sal de Vida is running slower than expected.

Rio Tinto Limited (ASX:RIO) says 2026 lithium production will be at the low end of its 61–64 thousand tonne guidance range, a detail that has drawn interest from those watching the Rio Tinto share price and the company's expanding battery materials business. Third-quarter lithium carbonate equivalent output was 13.0 thousand tonnes, up 4% on a year earlier but down 11% on the prior quarter, due to planned maintenance and weather. Nine-month output rose 33% to 40.3 thousand tonnes, so the longer trend remains one of growth.

Quarterly Performance

The third-quarter result was affected by planned maintenance and weather at operations, which limited output in the quarter. The nine-month total of 40.3 thousand tonnes leaves a requirement of about 20.7 thousand tonnes in the fourth quarter to reach the lower end of the full-year range. That represents a meaningful step up from the 13.0 thousand tonnes reported in the third quarter, which helps explain the emphasis on the lower end of guidance.

Rio Tinto's lithium Assets are mainly in Argentina following its Acquisition of Arcadium Lithium, and its operations include brine-based and other processing. Output from this type of operation can vary with evaporation conditions, equipment performance and project commissioning, so quarterly numbers may not move in a straight line. The company's commentary points to this range of factors.

Project Progress

Rio Tinto said the ramp-up of Fenix line 1B is progressing well, while Sal de Vida is ramping up more slowly than expected. These two project updates help explain how growth is likely to arrive. Fenix's additional capacity should support higher output, while the slower pace at Sal de Vida represents one reason guidance is tracking toward the low end of the range.

New lithium projects frequently take longer than initially forecast to reach design rates, as processing requires careful calibration of chemistry and equipment. Investors therefore tend to treat early ramp-up numbers cautiously. The company's next production report should indicate whether the rate of production has lifted and how much the delays affect planning for 2027.

Lithium Market Conditions

Prices for lithium chemicals have been volatile, and Supply has continued to enter the market. In Australia, Liontown reported first-quarter FY27 production of 78.0 thousand tonnes of concentrate, with softer spot prices cited as a Factor keeping its free Cash Flow negative. Although Rio Tinto is a far larger company, conditions facing other producers provide useful context for the sector.

Demand drivers for lithium include electric vehicles and stationary energy storage. Grid-scale batteries have become a growing part of the Demand story as electricity systems add more renewable generation. The extent to which demand growth absorbs new supply is the key question for pricing. Because lithium is a smaller part of Rio Tinto's Earnings than iron ore or copper, near-term lithium prices have a limited effect on the group's overall results.

Lithium Within the Portfolio

At the half-year result, Rio Tinto said copper, aluminium and lithium together accounted for more than half of underlying EBITDA, although the bulk of that was from copper and aluminium. Lithium offers a longer-term growth option and diversifies the company's exposure to energy transition materials. The company has been working to release Capital across its portfolio, with a program targeting US$5–10 billion.

Chief executive Simon Trott said the major projects remain on schedule and budget. In this context, commentary on Sal de Vida's slower ramp-up is a reminder that schedule and budget are not the only measures, as the pace of commissioning also affects production. How the Business balances lithium growth against capital discipline will be of ongoing interest to investors.

Currency and Cost Considerations

Rio Tinto's lithium costs differ from its Pilbara costs because they are concentrated in Argentina and other jurisdictions with different currencies and Inflation conditions. Energy, reagents and logistics are all important cost lines, and higher fuel prices linked to the Middle East conflict can have an effect across global supply chains. Government policy and export arrangements in South America can also affect the Economics of production.

Higher Australian interest rates, including the Reserve Bank's latest increase to 4.85%, are less directly relevant to its lithium projects, though global rates can affect the Cost of Capital for the wider sector. Consumer demand for electric vehicles is also sensitive to borrowing costs and fuel prices, with higher petrol prices potentially encouraging interest in electric vehicles even as finance costs rise.

What to Watch Next

The fourth-quarter production report will show whether the company has reached the low end of the 61–64 thousand tonne range. Key indicators include Fenix line 1B output and the rate of improvement at Sal de Vida. The full-year result will offer production guidance for 2027 and possibly additional detail on capital plans, along with any revisions to the timeline for lithium growth. Lithium prices will be the other major factor for earnings.

Currency is one further influence on results, as lithium is priced in US dollars and Rio Tinto reports in US dollars. In addition, costs differ between hard-rock and brine operations. Brine extraction depends on evaporation or direct extraction technology and is influenced by the local climate, which is one of the factors the company cited in its update for the quarter.

Water use and community considerations are also relevant to lithium brine projects in South America, and regulatory settings may evolve with time.

Key Takeaways

Rio Tinto produced 13.0 thousand tonnes of lithium carbonate equivalent in the third quarter of 2026, up 4% on a year earlier and down 11% on the prior quarter. Nine-month production rose 33%. Full-year output is expected at the low end of 61–64 thousand tonnes, with Fenix progressing well and Sal de Vida slower than expected. The fourth quarter will test how quickly production can lift.