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French mining and metals group Eramet has decided to stop work on a lithium production project in Argentina, aimed at shifting the group’s focus towards electric vehicle minerals, due to economic uncertainty created by a coronavirus epidemic.
Eramet had already put the project on hold in February, citing economic and regulatory instability in the debt-stricken South American country, and it said on Wednesday the covid-19 crisis had now led it to take a longer term decision to halt the planned construction of a lithium production plant.
The move will result in a cost of some 150 million euros ($163 million), including an asset impairment charge, and cash outflows of approximately 90 million euros in 2020, it said in a statement.
Chief Executive Christel Bories has targeted battery minerals such as lithium as a way to reduce Eramet’s reliance on the steel industry, which absorbs most of its historical nickel and manganese output.
The company said a pilot plant at its lithium mine in Argentina would continue to carry out tests after initial results showed high yields
The company said a pilot plant at its lithium mine in Argentina would continue to carry out tests after initial results showed high yields.
Eramet will take necessary steps with suppliers to ensure the project could be restarted rapidly once market conditions permitted, a spokeswoman added.
The group says its lithium mine ranks as potentially one of the most cost-efficient deposits in the world and contains drainable resources of nearly 10 million tonnes of lithium carbonate equivalent.
It had previously aimed to start production in late 2021 and reach annual output of 24,000 tonnes of lithium carbonate in 2024.
Eramet had announced at the end of March it was suspending its financial targets for this year due to the novel coronavirus epidemic.
It said then it had drawn down all its credit lines as a precaution and was cutting expenditure to a minimum, adding mining and metallurgy production had not been significantly impacted so far.
The group also announced in February it was scaling back plans to expand manganese ore output in Gabon.
Eramet shares were down nearly 2.3% Wednesday afternoon.
($1 = 0.9219 euros)
(By Sudip Kar-Gupta and Gus Trompiz; Editing by Jason Neely and Mark Potter)
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