Allkem flags $640m cost blowout across three major projects

afr.com:

The cost of building Allkem’s three flagship projects – one in Canada and two in South America – has blown out by $US413 million ($640.7 million) because of higher labour and material expenses, the lithium hopeful says.

Martin Perez de Solay, Allkem’s chief executive, said that while costs would be higher, the outlook for lithium – a key ingredient in the batteries that power electric vehicles and energy storage – remained strong.

Allkem, once known as Orocobre, will merge with processing specialist Livent to create a New York-listed $US10.6 billion lithium giant this year, positioning it to capitalise on soaring demand for the essential metal.

Allkem chief executive Martin Perez de Solay in May. On Monday, he flagged far higher costs for his lithium producer’s major projects. Natalie Boog

Last month, Allkem posted an annual profit of $US524.6 million – up from $US334.7 million, having recorded revenues of more than $US1.2 billion. The results came on the back of a stronger second-half performance from its Mt Cattlin mine at Ravensthorpe in Western Australia.

But Allkem, and the broader critical minerals sector, are facing climbing costs just as the competition for the clean energy metals heats up. Capital expenditure at Allkem’s James Bay project in Canada leapt by $US104 million, while costs at its Argentinian projects Sal de Vida, rose by $US 97 million, and Cauchari increased by $US213 million, the company said.

The increases bring the total cost blowout across the largest ASX-listed critical minerals groups to nearly $3.5 billion this year. In July, nickel producer flagged higher costs worth $275 million at its mines, while in May Hastings Technology Metals announced the budget for its Yangibana rare earths project