American Lithium Triples Peruvian Project, Defies Slump In Battery Metals

American Lithium AMLI announced a new estimated value of its Falchani lithium project, tripling the previous forecast to $5.11 billion. Alongside lithium carbonate, a potential potash sulfate and cesium sulfate byproducts could raise the after-tax value to $5.58 billion.

"The very large increase in net present value, combined with a low initial capex and robust economics in the updated preliminary economic assessment for Falchani, is the culmination of successful work programs at site and flow sheet optimization over the last couple of years," CEO Simon Clarke said in a statement.

The Falchani project, situated in southern Peru near the border with Bolivia, is the sole lithium project in the country, situated between key producers like Chile, Argentina and Bolivia. It currently awaits government approval of an early environmental permit study.

Last year, the company increased its deposit estimates to 5.53 million metric tons of lithium, projecting an operational lifespan of 32 years. The low operating cost, with less than $5,100 per ton of lithium carbonate, positions Falchani among the most competitive next-tier lithium projects under development globally.

Now read: As Oversupply Deflates Lithium Bubble, IPO Market Keeps In High Spirits

Lithium was once a small commodity market. But it went into overdrive as the world realized its crucial role in EV batteries. However, the mining market has different dynamics. Building mines is slow, expensive, subject to local regulations and often riddled with bureaucracy.

Since the boom, lithium price collapsed by 80% off its 2022 peaks. Declines in other energy-transition metals like nickel and cobalt have caused project delays, deal fallouts and increased difficulties in securing new funding.

London-based Horizonte Minerals HZM scaled back its nickel mine project as it announced emergency financing to complete its construction. At the same time, Chemaf Resources put itself on sale after a decline in cobalt prices.

Lithium slump also hit the Australian market, with Core Lithium CXO suspending multiple operations, citing "tough market conditions." According to a report, Australia, one of the largest lithium producers, expects further price declines as it plans to increase production by 2025.

As market conditions take their toll on mining operations, projects like Falchani stand out due to significant cost advantages.

See Also: 5 Materials Sector Stock Picks With Attractive Supply-Demand Dynamics For 2024

Image: Shutterstock