Dec 12 (Reuters) - Rio Tinto will invest $2.5

billion to increase production capacity at its Argentina lithium

project, it said on Thursday, as it seeks to cement its position

as one of the world's biggest miners of the battery metal.

The investment follow's Rio's takeover of Arcadium Lithium ( ARLTF )

in a $6.7 billion deal announced in October, and as

prices of the metal used in electric vehicles (EVs) are weakened

by Chinese oversupply and slowdown in EV sales.

Following the purchase of Arcadium, Rio is on track to

become the world's third largest lithium miner, behind leader

Albemarle and Chile's SQM.

As part of the ramp up, the Rincon project's capacity will

reach 60,000 metric tons, including a 3,000-ton starter plant

and 57,000-ton expansion plant, according to Rio Tinto. The

Rincon project earlier had a capacity of 53,000 tons.

"The attractive long-term outlook for lithium driven by the

energy transition underpins our investment in Rincon," Rio Tinto

CEO Jakob Stausholm said.

Construction of the plant is scheduled to begin mid-2025,

with initial production from Rincon is expected in 2028.

The investment is also in line with the South American

nation's ongoing ambitions to become a world-leading lithium

producer.

Rio had been banking on its Jadar project in Serbia to

supply much of Europe's lithium needs but it could take at least

two years to secure permits and the miner faces strong local

opposition to its plans.