Arcadium’s (Risky?) Oasis in Argentina

Staff Writer

Updated on:

Arcadium's Argentine Risk

January 10, 2024 – Allkem Limited (now Arcadium following the tie-up with Livent), the majority owner and operator of the Olaroz Project in Jujuy province, Northern Argentina, stands at the forefront of lithium production in a region rich with potential. As we delve into the intricate details of this venture, it becomes evident that while the Olaroz Project represents a promising asset, potential political risks loom large in the Argentine environment.

The Olaroz Project: A Lithium Hub

Allkem, with a commanding 66.5% stake, spearheads the Olaroz Project through its joint venture company, Sales de Jujuy S.A. (SdJ). The remaining ownership is distributed between Toyota Tsusho (25%) and the Jujuy provincial government mining investment company (JEMSE – 8.5%). This collaboration positions Allkem as a pivotal force in the lithium market.

The Olaroz Project encompasses extensive mining properties covering the majority of the Salar de Olaroz salt lake. Commencing exploration in 2008, Allkem has been actively extracting lithium since 2013, marking a significant milestone in 2015 with the initiation of lithium carbonate production from the Stage 1 operations.

Ownership Beyond Olaroz

In addition to the joint venture, Allkem holds 100% ownership of properties strategically positioned north and south of the Salar de Olaroz. These areas are believed to overlay a deeper extension of the salt lake, promising untapped lithium potential.

Furthermore, Allkem’s subsidiary, Advantage Lithium SA, possesses the Cauchari Project immediately south of the Olaroz Lithium Facility Stage 1 operations in the Salar de Cauchari. With substantial measured and indicated resources, this project adds another layer to Allkem’s lithium portfolio.

Political Risks in the Argentine Context

While Allkem’s lithium ventures present tremendous opportunities, the Argentine political landscape introduces a layer of complexity. The country has experienced historical political volatility and fluctuations in the foreign exchange market. Such conditions can pose challenges for foreign investors, impacting regulatory stability, currency values, and economic policies.

Investors must carefully weigh the potential benefits of Allkem’s lithium endeavors against the political risks inherent in the Argentine context. A sudden shift in government policies or economic conditions could influence the lithium market dynamics, affecting production, sales, and profitability.

Looking Ahead: Balancing Potential and Risk

As Allkem continues to navigate the lithium landscape, investors should remain vigilant, keeping an eye on political developments in Argentina. While the Olaroz Project stands as a beacon of promise, understanding and mitigating potential risks is crucial for investors seeking long-term success in the lithium market. As exploration activities extend to Allkem’s 100% owned properties, further discoveries could reshape the company’s future and the global lithium market as a whole.