Allkem's Argentina lithium project hit by inflation

Inflation, the prospect of an increase in the price of lithium and favorable market conditions influenced an update reported by Australia’s Allkem for its Sal de Vida project being built in Argentina’s Catamarca province at the Salar de Hombre Muerto.

The initiative aims to produce 45,000t/y of lithium carbonate equivalent (LCE).

Capex for the under-development first phase, to produce 15,000t/y of LCE starting in 2025, increased 38% to US$374mn, according to the latest study, with a focus on completing the mechanical assembly, Allkem said in a statement on Monday. .

Higher prices of soda ash, lime, natural gas and labor costs drove up the estimate for operating costs from US$3,612/t LCE to US$4,529/t in phase 1, which has been under construction since last year.

The second phase will add 30,000t/y of LCE for capex of US$657mn, up 25% compared to the previous technical report in March last year, the company said.

Allkem hopes to begin construction of the second stage once the mechanics of the first phase are completed and the corresponding permits are acquired. The construction period should not exceed three years, the company said.

Pre-tax net present value for the overall project increased by 82% to US$5.51bn compared to the previous study, the company said.

Resources and reserves 

The latest analysis shows an increase in mineral resources and reserves of 5% and 43% to 7.17Mt and 2.49Mt, respectively.

“The updated study results clearly demonstrate the exceptional value and robustness of this project and its future expansion. As expected, global inflation has resulted in higher capital and operating costs, but it remains clear that we will deliver material shareholder value through the development of Sal de Vida," said Martin Perez de Solay, Allkem’s managing director.