Herbert Smith Freehills has advised the International Finance Corporation (IFC), a member of the World Bank, on its financing of Allkem, a world-class lithium chemical producer, to support the development of Sal de Vida, a greenfield lithium operation in the province of Catamarca, Argentina.
The financing is IFC's first investment in lithium mining and includes up to US$100 million for IFC's own account and up to US$30 million in mobilization. An additional US$50 million parallel loan arranged by IFC is expected to close subsequently to complete the total financing package.
Lithium is a key input for batteries that power clean energy technologies and plays a critical role in the transition to a low-carbon future. The International Energy Agency estimates that the lithium supply needs to increase sevenfold by 2030 to reach its net-zero emissions scenario by 2050.
The Sal de Vida project is expected to produce 15,000 tons per annum of Lithium Carbonate Equivalent (LCE) in its first stage. The investment will support Allkem's construction and operation of a battery-grade brine lithium plant at Sal de Vida which is located at 4,100 meters above sea level in the Salar del Hombre Muerto, Catamarca.
The project financing facility has been structured as a green and sustainability-linked loan. IFC’s environmental and social performance requirements are globally recognized and the awarding of a sustainability-linked, green loan to the facility is recognition and validation of the high ESG standards already adopted at Sal de Vida by Allkem.
The Herbert Smith Freehills team was led by finance partner Edward Dougherty, supported by senior associate Danielle MacGillivray, and associates Sebastian Celis, Lina Vélez and David Peraza in New York. Partners Jay Leary and Miles Wadley provided advice from Australia, with assistance from Michael D’Agostino, Frank Main and James Darcy.
IFC was advised on Argentine law by the firm Mitrani Caballero. Mitrani Caballero team was formed by partner Julio Martinez, Matías Olcese, Maria Laura Lede Pizzurno, Corina Laudato and Maria Paula Terrel and by the associates Catalina Sarrabayrouse, Maria Jose Fernandez Ruiz, Juan Manuel Iglesias Mamone, Leonardo Palomares, Julieta Concetti and Yamila Di Martino.
Edward Dougherty commented: "We are pleased to have advised IFC on its inaugural investment in the lithium sector, on what is also a very meaningful USD investment into Argentina. This transaction demonstrates our Latin America team's strength in structuring complex financing packages for clients who want to support the global energy transition. Given the deal’s connection to the US, Argentina and Australia (where our firm is uniquely strong), it is also great example of HSF’s ability to advise on major projects across multiple jurisdictions."