Rio Tinto has acquired the Rincon lithium project in Argentina from Rincon Mining for $825m in a move that signals Rio’s intent to grow exposure to battery metals.

Rio Tinto have outlined a commitment to invest in the global energy transition to the Rincon acquisition demonstrates the delivery of their strategy.

“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,” said Rio Tinto Chief Executive Jakob Stausholm.

“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.”

On completion of the acquisition, Rio Tinto will conduct studies on the mine to confirm the mineralisation at the project, as well as sustainability and environmental assessments.

Rio have said they propose to utilise direct lithium extraction technology at the mine as it improves lithium recovery when compared to other methods.

It is clear from Rio Tinto’s recent production report the mining group are still heavily weighted towards Iron ore having shipped 237 mt in the period September 2021 year-to-date.

Indeed, the production report didn’t include lithium production so Rio Tinto’s new acquisition will add a new metal to their reports in the future.

Rio Tinto are also working to develop the Jadar lithium-borates project in Serbia. Rio Tinto committed to a $2.4 billion financing of the Jadar project in July.

Rio Tinto reported a 118% increase in EBITDA in the six months to 30th June 2021 helped higher by a 71% increase consolidated sales revenue to $33 billion. Rio also declared a $5.61 dividend for the period.

The FTSE 100 rose on Tuesday as investors bought into the dip created by fears over the Omicron variant and economic consequences.

The rally was broad with investors stepping into to pick up shares that had suffered over the past week, albeit it in thin volume typical of this time of year.

Housebuilders were among the top risers after a period of selling following the surprise interest rate hike last week. Barratt Developments, Taylor Wimpey, Persimmon and Berkeley Group were up between 2.8%-3.1% at the time of writing.

JD Sports was the FTSE 100 top riser rebounding from a torrid month which saw shares give up around 20% of their value after the CMA blocked their acquisition of Footasylum. JD was 3.2% to the good at 205p.

“As we head towards an uncertain festive break the market is swaying about more than someone who’s over-indulged on the sherries on Christmas Day,” said AJ Bell investment director Russ Mould.

“That’s unsurprising as investors still awaiting a full picture on just how disruptive Omicron is going to be – with UK Prime Minister Boris Johnson putting off any decision on further restrictions for now.

“There’s certainly already been signs of a sizeable hit to retail, hospitality and travel businesses as people enter self-imposed lockdowns to avoid having to isolate over Christmas.”

Travel shares were among the risers but were know where near recover their losses since the discovery of the Omicron variant.

IAG shares were 2.4% stronger at 134p and Rolls Royce added 2% to trade at 112p.

As one would expect, defensive shares and those thought to benefit from COVID restrictions fell.

Ocado was off 0.7% and Dechra Pharmaceuticals was the worst performer, giving up 1.4%.

Edmond De Rothschild has outlined their convictions for 2022 in a presentation to the press and India was included as a geography that saw strength in next year.

India has offered much promise for sometime now and some would argue it hasn’t quite lived up to expectations. However, Rothschild highlighted something could be afoot in India shares given their impressive returns in 2021, despite rising commodity prices.

India is net importer of fossil fuels and high commodity prices typically weigh on the economy. For Indian shares to rally through such a period suggests underlying optimism and a transitioning economy.

When Modi took power there was a significant level of hype around potential reforms. Modi outlined a wave of infrastructure programmes through ‘Make In India’ and there has been significant capital expenditure in India.

Although manufacturing has been robust with PMI consistently in the high 50s throughout 2021, Rothschild pointed to India’s tech sector and digitalised economy as a ‘promising theme for the coming years.’

India has a young population that are highly accustomed to the internet and digital world.

Indeed, there are 560 millions internet users in India, the largest in the world only behind China. Not only does this provide opportunities for business digital and tech businesses, it has created and environment where technology businesses can thrive.

Speaking at the press conference, Rothschild said they saw the potential for the next Alibaba or Tencent being a product of India’s thriving tech sector. 

Rothschild also pointed to the favourable demographics of India. India has a young population which is increasingly entrepreneurial supporting a strong jobs market.

India also has a favourable taxation environment. Corporation tax in India is now less than that of the Euro Area and other advanced economies which will support investment in the years to come.

In addition to India, Rothschild also said they had conviction in European and Japanese equities.

In terms of broader conviction themes post COVID-19, Rothschild earmarked Climate Change, Big data, Human Capital and Health-Care.