In a recent interview, the chief executive of American Lithium said his company’s Falchani lithium mine in Peru has seen its likely costs for its first phase of construction rise about 20% from its original estimate to $700 million.

In the interview, American Lithium CEO Simon Clarke said, “If you think about the post-COVID world and inflationary pressures, that bill (of $580 million) is probably more like $700 million today.”

As the world’s second biggest producer of copper, Peru is now trying to gain a piece of the rapidly growing market for lithium. Already neighbors Chile, Argentina, and Bolivia together form what is sometimes called the “lithium triangle,” due to their massive deposits. However in Peru, the Canadian-owned Falchani project is the only project currently under development, and deposits are expected to be much smaller than in the neighboring countries.

Clarke noted that the Peruvian government has made it clear that, “they want to attract other investment to drive the mining sector forward,” noting that since a government shake-up last year, drill permit approvals have begun being delivered now.

Clarke predicts that construction at Falchani may begin by late 2024 to late 2025, which would put production beginning at late 2026 or early 2027. That assumes that the environmental impact assessment, which may take three to six months, and the updated economic assessment, will be completed soon.

A newer economic assessment will also be undertaken to include an analysis of additional byproducts which were not examined in the initial analysis, such as potassium, cesium and rubidium, according to Clarke.

Clarke said  his firm was holding talks regarding additional investment in the project, and that they were performing additional drilling tests in a new area near the Falchani site following approvals being issued last month.

Clarke said, “We’re certainly very excited by what we saw on the surface. We should start to get results from that over the next couple of months.”