PERTH (miningweekly.com) – The International Finance Corporation (IFC) will provide ASX- and TSX-listed lithium producer Allkem up to A$180-million for the development of its Sal de Vida project, in Argentina.

The financing is IFC's first investment in lithium mining and includes up to $100-million for IFC’s own account and up to $30-million in mobilization. An additional $50-million parallel loan arranged by IFC is expected to close subsequently to complete the total financing package.

“We are proud to partner with IFC to ensure long-term safe and sustainable operations, responsible products, and thriving communities. We are committed to the highest sustainability standards for Sal de Vida so that it will contribute to the economy of Catamarca via local employment, the development of local supply chains, and community development programmes,” said Allkem MD and CEO Martin Perez de Solay.

A 2022 updated feasibility study for the Sal de Vida brine project estimated that the Stage 1 operation is expected to require a capital investment of $271-million to develop a production capacity of 105 000 t/y of lithium carbonate.

The Stage 1 operation is expected to have a pre-tax net present value of $1.23-billion, at an 10% discount rate, and a pre-tax internal rate of return of 50%, with a pay-back period of under two years from the start of commercial production.

The Stage 2 expansion would add an additional 30 000 t/y of production at a capital cost of $524-million, bringing total production to 45 000 t/y. The Stage 2 construction is scheduled to start immediately after Stage 1 construction is completed, with Stage 2 production targeted for 24 months later.

This is the first time a greenfield mining project’s financing has been structured as a green and sustainability-linked loan, the IFC said in a statement, noting that the project’s ambitious sustainability targets included increasing the percentage of women in Sal de Vida’s workforce from 10% in 2022 to 26% by 2030 and expanding the use of renewable energy in the production cycle to 50% by 2030.

“Our investment in Allkem is part of IFC’s strategy to develop global supply chains that accelerate the transition to a low-carbon future while creating jobs,” said IFC MD Makhtar Diop.

“It will strengthen Argentina's position as one of the world's leading lithium producers and help set high sustainability standards for the lithium mining industry."

Allkem is in the midst of a merger agreement with NYSE-listed Livent to create a $10.6-billion global lithium chemicals producer. The transaction is expected to close at the end of 2023 and would see Allkem shareholders own some 56% of the newly created company, with Livent shareholders holding the remaining 44%.

Under the transaction, existing Allkem shareholders will receive one share in the newly ASX-listed company for each of their shares held, except for shareholders in certain ineligible jurisdictions, which will receive cash proceeds from the sale of the new share chess depositary interests in lieu of such shares.

Livent shareholders will receive 2.406 NYSE-listed shares for each Livent share held.

The combined company would have a primary listing on the NYSE and maintain a foreign exempt listing on the ASX.