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.

Antofagasta shares sank on Monday after the leftist candidate Boric won 58% of the vote in the Chilean presidential race.

The left-wing president was voted in on the promise of reforms that include greener policies to help protect the environment.

This would include the blocking of the controversial Dominga copper mine operated by Andes Iron.

Although this doesn’t have an immediate direct impact on FTSE 100 -listed Antofagasta, it does suggest life will become harder for the miner during his tenure.

Antogasta shares were down 4.1% at 1,314p at the time of writing on Monday.

The news comes shortly after the release of Antofagasta’s 2021 Climate Change Report in which the group outlined steps it was taking to improve their environmental sustainability.

These include measure such as increasing the use of seawater to help reduce water scarcity and the reduction of emissions.

“Climate change is one of the greatest challenges facing society and our company today. As a copper producer, Antofagasta can address this challenge both by decarbonising its operations and by responsibly and sustainably providing a key commodity for the transition to a low-carbon economy,” said Iván Arriagada, Antofagasta CEO.

“Our Climate Change Strategy is a dynamic strategy that we will be adapting in line with changing climate scenarios, regulation and scientific and technological advances, always with the aim of boosting the company’s resilience and competitiveness. This is, we believe, the best way to fulfil our purpose of developing mining for a better future.”

In a production report released in October, ANTO said they expected annual production to be in the region of 710-740,000 tonnes.

Antofagasta’s biggest recent issues have been heavy rainfall and the spread of COVID-19, they now have political risk to add to the list.

The FTSE 100 sank on Monday morning as fears over the spread of Omicron and global growth sapped all confidence out of markets causing severe selling in European shares.

The FTSE 100 was down 1.9% at 7,171 and German DAX off 2.76% in early trade on Monday. The Italian FTSE MIB was 2.7% weaker at 25,892.

The selling eased through the session and bargain hunters stepped in to take indices off their worst levels as the session progressed.

The economic issues caused by the spread of Omicron spooked markets following a week where central banks began to tighten monetary policy. German and France have implemented travel restrictions, whereas the UK refused to rule out a lockdown over Christmas.

‘’The rampant nature of Omicron and its potential impact in sharply slowing global growth is continuing to unnerve investors, with the FTSE 100 opening sharply lower, down 2% in early trade. With the vaccine maker Pfizer estimating that the pandemic will last until 2024, uncertainty about the year ahead is rippling through the markets. Countries are bracing for waves of infection to hit, watching the new variant rip through communities in South Africa and the United Kingdom,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.

The Hospitality sector has already been heavily hit as people cancelled Christmas get-togethers and concerns will now shift back to travel and the propensity of people to book holidays over the vital festive period trading period.

The strife was evident in travel shares with Rolls Royce and IAG down 5.5% and 4.8% at the time of writing.

Growth downgrade

Not only did markets have to contend with the uncertainties of Omicron, but the downgrade of US growth by Goldman Sachs.

Goldman Sachs lowered their growth target after Joe Manchin rejected Biden’s plans for a $2 trillion spending stimulus through the Build Back Better program.

As a result, Goldman Sachs has lowered it’s growth forecast from 3% to 2% for 1Q, 3.5% to 3% in 2Q, and from 3% to 2.75% in 3Q.

Whilst the downgrade isn’t earth shattering, the timing is terrible. Investors have just learnt there will be reduced stimulus provided by the Federal Reserve and this stimulus is now being withdrawn from an economy with lower growth forecasts.

This played out in European equities as well as US futures on Monday morning.

Few gainers

It will be no surprise few stocks ground put gains on Monday morning. Those gains on the FTSE 100 included pharma company Dechra and precious metals miners Polymetal.

“It says something when the only two risers in the FTSE 100 were Polymetal – a play on precious metal prices, with gold living up to its reputation as a store of value as it holds firm at just under $1,800 per ounce – and Royal Mail. The latter will no doubt benefit as consumers rush to place last-minute online orders for Christmas presents, avoiding the high street for fear of getting Covid,” said Russ Mould, investment director at AJ Bell.