Allkem sees Argentine lithium projects starting production in 2023

First production at Australian lithium producer Allkem’s expansion of its Olaroz operation in northwest Argentina’s Jujuy province is now expected in 2Q23.

Stage 2 will add 25,000t/y of lithium carbonate for a total of 42,500t/y. 

Initially completion was estimated for this half of the year but the impacts of inflation and supply chain constraints caused a delay and for capex to increase 12% to US$425mn. The project is 93% complete, the company said in a report on Friday.

Olaroz is 66.5% held by Allkem and is operated via local company Sales de Jujuy in a joint venture with Japanese trader Toyota Tsusho and provincial government entity JEMSE.

About 9,500t of the new production (stage 2) will be used as feedstock for a lithium hydroxide plant in Japan’s Naraha, which belongs to Allkem and Toyota Tsusho.  

The Japanese trader is the exclusive sales agent for lithium carbonate produced under a joint marketing arrangement.

The installed capacity of Olaroz (stage 1) is about 17,000t/y of lithium carbonate. Production for 2Q22 was up 17% on the previous corresponding period to 3,289t due to good plant performance, the report said. Production for FY22 is estimated at 13,000t.

Technical grade and battery grade lithium carbonate produced at the facility are sold to customers in Asia, Europe and North America. Battery grade lithium carbonate is typically sold to manufacturers for the production of lithium-ion batteries used in electric vehicles.  

A further expansion is already planned, given the proximity to the Caucharí mineral resource, the company said. Combined with Olaroz resources, the total reaches 22.5Mt of lithium carbonate equivalent, potentially making it one of the world's largest brine resources, according to Allkem.

Stage 3 would allow Olaroz stage 1 to be a dedicated technical grade facility. Technologies are being reviewed that may see an increase in recovery from 75% to 95% in Olaroz stages 1 and 2, the company said, adding that pilot tests are being carried out with the aim of having a feasibility study for the 1H23.

Sal de Vida 

Allkem also has the Sal de Vida project in Catamarca province.  

Sal de Vida is located about 200km from Olaroz and is designed to produce 45,000t/y of predominantly battery-grade lithium carbonate through an operation at the Hombre Muerto salt flat, according to a feasibility study. Development is taking place in two stages with stage 1 targeting capacity of 15,000t/y and stage 2 an additional 30,000t/y. 

Stage 1 considers an investment of US$271mn and stage 2 US$523mn. First production is expected in 2H23.

Allkem and the International Finance Corporation (IFC) have agreed to a non-binding term sheet for US$200mn in project finance for Sal de Vida, subject to final terms to be agreed upon by IFC, Allkem and the World Bank Group.