The ongoing uptake of electric vehicles (EVs) will ensure that demand for lithium will continue to grow, but the price of the precious metal could be volatile, according to Rio Tinto’s CEO Jakob Stausholm.

Speaking on Sunday, Stausholm said the company will avoid making any large acquisitions in the lithium industry for the time being but will look into ways to improve lithium extraction technology.

A recent drop in demand for EVs has caused a fall in lithium prices, with a basket tracked by Benchmark Mineral Intelligence dropping more than 80% in the past 12 months. This has prompted mining companies such as BHP to steer clear of investing in the metal. Rio Tinto remains one of the few large mining companies willing to invest in lithium.

Stausholm told Reuters on the sidelines of the annual PDAC conference in Toronto: “We have taken a consistent view that prices of battery materials will be volatile. Ideally, you will need more battery capacity, so it is not just batteries for EVs but also stationary batteries. So the world will have more batteries, I have no doubt about that – and therefore you need more lithium.”

Rio Tinto’s Rincon project in Argentina has an annual production capacity of 3,000 tonnes and first production is expected by the end of 2024.

Elsewhere, Chile’s Minister of Finance, Mario Marcel, voiced his desire to have three or four new lithium projects operational by 2026. The nation has launched its National Strategy for Lithium, under which there will be public-private partnerships (PPPs) across the entire industrial cycle of lithium production.

Chile is the world’s second-largest producer of lithium after Australia. Several companies have shown interest in the PPP model, including Rio Tinto, Tsingshan Holding Group, Tianqi Lithium and France’s Eramet.