PS5 does not apply as the project footprint is located on mining concessions located on government land on which there has been no economic or physical displacement.

PS8 is also not applicable as no archaeological sites have been identified in Allkem’s tenements. However, the company will develop a Chance Finds procedure in case archaeological or cultural resources are encountered during construction.

 The key E&S risks of the Project relate to use of water, given SDV's location in an arid region in the Argentinian Puna and to potential impacts on the fresh and saline water systems of the Salar and on the region's biodiversity since the Salar is a globally recognized Important Bird and Biodiversity Area (IBA) and Key Biodiversity Area (KBA); as well as the relationship and engagement of the Project with local communities and Indigenous Peoples.  Other E&S risks that are associated with the Project include: (i) the Company’s implementation of an environmental and social management system (ESMS) commensurate with the E&S risks of the various phases of the Project, (ii) assessment of cumulative impacts from other existing and planned developments in the area (including impacts on water resources, regional biodiversity aspects and social infrastructure), (iii) fair and safe working conditions and management of OHS aspects including response to COVID in terms of job protection and worker safety, (iv) contractor management in terms of all relevant E&S issues, (v) community and workers transportation safety issues, (vi) effective management of community related impacts, stakeholder engagement, grievance redress and communication during the construction and operation of the Project. Contextual risks include the increased global focus on Lithium mining and their potential impacts on water resources, biodiversity and communities. The proposed Project is Category A per IFC’s Environmental and Social Sustainability Policy. 

Policy

Allkem has recently revised and updated the following E&S Policies: Environmental, Health & Safety (H&S), Community and Social Performance, and Human Rights. These policies establish the principles to guide the Company’s E&S performance through effective management systems, risks and impacts assessment and control, incident reporting and investigation, and overall performance monitoring, accountability and continuous improvement. These policies are applicable to employees, contractors, suppliers and service providers and to all subsidiaries and other associations where the Company assumes management functions.

The Community and Social Performance policy, which is aligned to IFC Performance Standards, declares Allkem’s adherence to the United Nations Declaration on the Rights of Indigenous Peoples and the International Labour Organization’s Indigenous and Tribal Peoples Convention, while underscoring the importance of early, collaborative, transparent and culturally appropriate engagement. The Environmental Policy includes provisions regarding efficient use of energy, water and land, participatory environmental monitoring, reduction in emissions and overall carbon, water and biodiversity footprint minimization.  The H&S Policy embraces a “zero incident – zero harm” culture and outlines the objectives for the protection of the health & safety of employees.  As per ESAP item # 01, SDV will review and update the Environmental and H&S policies to ensure commitments set forth in IFC Performance Standards are adequately included and Good International Industry Practice (GIIP) referenced and followed.

Environmental and Social Assessment and Management Systems

Occupational health, safety, and environment (collectively “HSE”) aspects in all operations and projects from the Company are managed primarily through Allkem’s Integrated HSE Management System which is aligned with ISO 45001 and 14001 standards. The management system is well-structured, follows the mitigation hierarchy and a continuous improvement philosophy. It comprises corporate functions of policy, standards, manual, templates, workplace functions of risk assessments, management plans, procedures, forms, with defined indicators and records that allows the monitoring and tracking of the HSE performance with results reported to senior management. Allkem is in the process of evaluating the ISO 14001 and 45001 management system certifications for the Sal de Vida Project.

With regards to community relations and overall social management, Allkem has management tools that are part of the Company’s E&S management system aimed at contributing local communities to benefit socially, environmentally, and economically from the Company’s activities through a “shared value” (“valor compartido”) strategy, based on engagement with communities, indigenous peoples and other stakeholders, understanding and respecting their local context, concerns, livelihood sources, and customs.

Identification of Risk and Impacts

The Company has undertaken extensive environmental studies, consultation and E&S impact assessment (ESIA) studies over the years during the different development phases of the Project, from the initial exploratory drilling to the establishment of a pilot processing plant and the implementation of the Project that is being developed in the Salar. These studies were carried out by local and international consultants. The latest ESIA is from 2021 and corresponds to a 10.7 ktpa LCE project which was developed to meet local requirements and has been approved by the environmental authority of Catamarca. The ESIA is updated every two years as per local regulations and includes a biodiversity baseline and other studies including archaeological, social, and physical components. The Company is in the process of presenting an updated addendum ESIA to permit the production of 15 ktpa LCE. In addition, there are specific E&S assessment and permit applications for quarries and other facilities associated with the Project, ensuring that all the activities, assets, and developments in the Salar are granted the required permits. 

Building on the Project’s E&S studies, and to better align E&S information and impact assessments to IFC standards, the Project has conducted three studies in 2022 with support from third party consultants: (i) supplemental field work and social baseline covering all seasonal and permanent rural population including indigenous people, communities and ‘puesteros’ or small dwellings or hamlets in a radius of 50km of the Project, (ii)  an offset feasibility study that is currently under way designed to scope potential biodiversity offsets, consult with stakeholders and conduct a ‘loss/gain’ assessment with respect to biodiversity impacts, and (iii) a Rapid Cumulative Impact Assessment (RCIA) to assess if the combined impacts from SDV and other projects and activities in the Salar could  adversely affect Valued Environmental and Social Components (VECs) and to determine corresponding mitigation and management measures.

The supplemental social baseline recorded that a total of approximately 80 seasonal and full-time residents live in the study area, with a maximum of 60 at any one time. The study area is comprised of the community of Ciénaga Redonda and 16 “puestos” or hamlets. The study confirmed that there are residents that self-identify as indigenous, and that there is high geographical mobility in the population with extended family travelling in and out of the area for work purposes, education and to support family members with economic and domestic activities. The harshness and remoteness of the area means that few people live there year-around and that employment in mines is a key reason for people to have remained in the area.

The Company has undertaken studies to evaluate the potential risks resulting from climate change impacts on the Project. The identified risks and opportunities were evaluated for the short (<3 years), medium (3-10 years), and long-term (10-20 years) periods. SDV operations are not anticipated to be significantly affected by changes in climate conditions.

The ESIA determined that the Project would be able to limit adverse environmental and social impacts through adequate project design and implementation of appropriate mitigation measures. The community mapping determined that the project’s facilities and operations do not overlap with community land and natural resource use. Some community members, however, remain concerned about project impacts to surface waters and shallow groundwater sources, a concern that will be addressed through an adequate water management program (see section below in PS3) and stakeholder engagement activities. Local communities are very familiar with mining operations and a significant number of community members work in the project site and at neighboring mines, including members of indigenous communities.

Allkem recognizes the importance of cumulative impact assessment on valued environmental and social components (VECs), and of monitoring and management of these VECs, and, as indicated in ESAP item # 02 SDV will incorporate the recommendations derived from the RCIA into the Project’s E&S management plans and procedures. This will ensure that existing management and monitoring programs are updated to incorporate provisions within Allkem’s scope and responsibility. Such recommendations will be subject to review and discussion with IFC as part of the Project supervision.

As indicated in ESAP item # 03, for any future activity related to the Project that is not currently included in the existing ESIAs (in case of new requirements during the development of the Project, such as: additional flowlines, new water extraction wells, new water evaporation ponds, power lines, etc.) the Company will conduct an integrated E&S impact identification and assessment study commensurate with the nature and scale of the proposed development’s potential impacts and the requirements of the IFC Performance Standards (PS) regarding the identification of risks and impacts. The results of these studies will be communicated to the Project’s affected stakeholders and relevant authorities.

Management Programs

SDV has a series of E&S plans and procedures for significant Project risks and includes details on controls, monitoring actions, and performance indicators broadly aligned with the requirements of the WBG EHS Guidelines.

The appraisal identified the need for SDV to develop the following management programs within the scope of the Project and within Allkem’s scope and responsibility as part of ESAP item # 04: (i) a “Footprint minimization and management procedure” to confirm that the development of any activity in the Salar takes into consideration the assessment and reduction of the footprint, and preventive measures to control alteration of runoff patterns and promote reinstatement of affected areas; (ii) update the “Chance finds procedure” ensuring that on top of complying with Argentinian regulations it properly covers IFC PS8 requirements, including training and reporting; (iii) review and improve the Project’s “Defensive driving management plan” to include adequate mechanisms to ensure proper monitoring, and overall good safe driving practices and competency for workers, contractors and service providers; and (iv) develop an “E&S transportation management plan” with due consideration to the objectives set forth in PS4 and based on an analysis of potential risks and impacts of Project activities in all transportation and supply routes.

Organizational Capacity and Competency

SDV has allocated adequate and well-trained E&S and technical personnel for the development of the Project, with some of them based in the field site and others at headquarters in Buenos Aires and local offices in Catamarca’s capital city. SDV’s community relations’ manager reports to the Project’s director and is supported by two assistants and a coordinator to manage the area of direct social influence in the Department of Antofagasta and the neighboring hamlets in Salta. As of April 2022, the environmental area has one manager and four staff with a series of open positions, while the occupational health and safety area has a dedicated manager and ten technical personnel. Allkem is in the process of revisiting staff and resources to ensure that these are sufficient in number and commensurate to the E&S risks of the new phase of the Project. As required in ESAP item # 05, Allkem will include a senior biodiversity coordinator well-versed in PS6 to manage all the biodiversity requirements and activities resulting from the implementation of the project to IFC standards. Allkem will also supplement its social team with a field-based senior community relations officer and the environmental team with a field-based water resources environmental monitoring coordinator with hydrogeology background to oversee all the water related components of the Project. This will ensure that E&S resources respond to the demands associated with the construction and entry into operations of the Project.

Emergency Preparedness and Response

Allkem has an overarching Emergency Preparedness and Response Plan (EPRP) which includes potential emergency scenarios (generated by both internal and external risk factors, such as spills, fires, road accidents, and natural disasters), emergency contacts and communication flows (internal and with community leaders and government authorities), protocols for the use of equipment, and drills. The Company discloses the EPRPs to employees and contractors’ workers.

SDV has selected, trained, and equipped its own emergency response team. Brigades are equipped for the types of risks encountered in this setting. Drills are conducted on a regular basis and the overall emergency capacity and response is evaluated as part of the HSE management system.

The organization has a medical center adequate for an advanced exploration site, with on-site doctors, a pharmacy and x-ray capabilities. There are two ambulances at site equipped for intensive care. SDV is evaluating the need to expand the medical center and resources in light of the commencement of Project construction and development.

Monitoring and Review

Allkem has a well-established system for E&S monitoring and review at different levels of the organization and the Project.  There is a Sustainable Development Committee Charter that oversees human affairs and addresses strategy, performance and risk review in the areas of safety, health, environment, community, climate and human rights. The committee also directs and reviews the annual sustainability report which has performance indicators with regards to people, environment and value chain in line with the Global Reporting Initiative (GRI).

Legal obligations from environmental permits and local regulations are monitored through an automatic register in an annual control matrix, and a specialized outsourced service for control and warning of expiry dates. The matrix records the National, Provincial and Municipal permits as well as commitments and requirements established in the Environmental Impact Report approval resolution. Environmental components such as noise, discharges, air quality, water extraction, use and discharges are monitored as part of the environmental management system. On the social side, the Company runs a system that oversees the compliance with social obligations derived from permits, stakeholder engagement interactions, and social investment programs. As per ESAP item # 06, SDV will review the qualitative and numeric standards of their E&S management plans to ensure that all relevant aspects, including those for environmental noise and any release to the environment in general (liquid discharges of treated effluents and air emission from diesel generators) are aligned with the standards set forth in the WBG EHS General Guidelines and relevant aspects of the Mining WBG EHS Guidelines.

Allkem has implemented an E&S Participatory Monitoring Program where representatives from communities assist and participate in the E&S monitoring and review process of potential impacts and corresponding mitigations and controls. The program has been especially designed to address community concerns related to impacts to surface water resources.

E&S Contractor Management

In accordance with Allkem’s Suppliers Code of Conduct all suppliers and contractors must comply with the Company’s policies and procedures. The Company uses an integrated supplier control system (“Sistema Integrado de Control de Provedores” or “SICOP” for its Spanish acronym) to ensure suppliers meet the mandatory HSE requirements before accessing any work sites, conduct any activity or leave the premises and site operating areas. Once incorporated into the operation, contractors and suppliers at site are subject to inspections, audits and controls. However, off-site contractors (such as transportation providers) and off-site suppliers, including those assisting the Company with the social investment program, are not subject to systematic checks yet. SDV would benefit from expanding the controls and check-ups to contractors and suppliers that are out of range of the site supervision tools and programs. Hence, as per ESAP item # 07, SDV will analyse and correspondingly expand the SICOP to off-site contractors and suppliers and include them within the scope of the Company mandatory HSE requirements. 

SDV currently employs an estimated 194 direct and indirect (contract) workers.  Of these, most are from the Catamarca Province with 23% from the area of direct social influence and 67% from the area of indirect influence. During the construction phase, SDV expects to employ up to 400 workers. Total operations’ labor force is expected to be 150 people for 2 years post construction, rising to 178 for the remainder of operations. SDV anticipates that the majority of staff will continue to be from the area of direct and indirect social influence.

Human Resources Policies and Procedures

Allkem Human Resources Policy is aligned with local regulations and with PS2 requirements, covering labor and working conditions, including prohibition of child and forced labor, non-discrimination, promoting equal opportunity and respecting freedom of association and prevention and management of gender-based violence and harassment.

Working Conditions and Terms of Employment

All employees are provided with offer letters describing labor and working conditions, and through the induction program are informed of the corporate policies and the Code of Ethics. E&S contractual agreements with all contractors require compliance with the Company’s Human Resources policies and the Code of Ethics. Contractors are monitored through a digital program that tracks induction training, payments, benefits and vacation, and overtime. SDV is committed to developing a skilled, engaged and productive workforce through continuous training and support for advanced study.

Worker’s Organizations

SDV protects the rights of workers to unionize with approximately 30% of workers currently unionized. The main construction union is the Union of Construction Workers of Argentina (UOCRA) with whom it has not signed a collective bargaining agreement. SDV has a collective agreement with the Argentine Miner Worker’s Association (AOMA), which will be valid until the first ton of Lithium is produced at which point it will be renegotiated. Drivers are covered under the Transport Workers’ Union.

Non-discrimination and Equal Opportunity

Allkem applies a Human Rights Policy, as well as a Code of Conduct which have provisions for equal opportunity and non-discrimination as well as policies against discrimination, bullying and harassment or victimization of all employees. The project actively promotes diversity in its hiring practices.  Managers are required to develop KPIs and goals to promote wider gender diversity which must be submitted to the Board for review and approval. To promote gender representation, the Board ensures that a minimum of two (2) women are on the Board. Approximately 23% of Allkem’s employees are women.

Local hiring is prioritized by SDV with specific policies, approaches and government reporting requirements in place to ensure compliance with this standard. Hiring priority is given to those workers in the area of direct social influence, with Human Resources (HR) partnering with community relations to ensure that local communities are both informed and prepared to apply for open positions. SDV additionally provides training to local community members to enhance their skills to enable them to be trained for positions as semi-skilled labor.

Allkem implements a policy on prevention of Gender Based Violence and Harassment (GBVH) that applies to direct and indirect workers, and which ensures confidentiality.

Worker’s Grievance Mechanism

Labor grievances currently are submitted informally to a line manager or to a representative of HR.  SDV is upgrading and formalizing its labor grievance mechanism with the support of an outside firm and system (“Resguarda”) which focuses on ethics, compliance and cybersecurity. The Resguarda grievance mechanism is accessible to all workers, and other third parties.  As part of ESAP item #08, SDV will ensure that the updated Labor Grievance Mechanism aligns with the requirements of PS2 and that GBVH grievances are adequately addressed with a survivor-centered approach implemented by specially trained personnel, and that all employees, contractors and subcontractor workers are aware of the mechanism and know how to access it.

Worker’s Housing

Workers are housed at a campsite at the Salar overseen by HR and managed by the general services department. The camp and its services are designed to meet the International Association of Oil and Gas’ standards (IOGP) and offer the same conditions to employees and contractors. Housing is aligned with best practice and aligns also with the requirements of IFC/EBRD accommodation requirements; rooms are shared by two persons with a bathroom shared by those two people. The campsite includes a gym and cafeteria enjoyed by all workers. Night shift workers have separate sleeping quarters to allow undisturbed sleep during the day. No workers are housed in the neighbouring communities. The rotation roster is predominantly 14 x 14 days. The camp and facilities are designed for 300 workers and will be expanded to accommodate the workforce at the peak of the construction. Workers are transported to site by SDV from Antofagasta de la Sierra and other towns.

Occupational Health and Safety

The OHS management system is structured according to international safety standards and templates and follows a logical process from tracking of leading indicators such as training hours, number of inspections, toolbox meetings, job safety assessments and safety drills, to lagging indicators such as incident records and injury rates per hours worked. The system describes a continuous improvement cycle for hazard identification, risk assessment and control, compliance with regulatory requirements including competency, training and inductions, incident reporting and investigation and a system of preventive and corrective actions to avoid recurrence.

The Project enhances OHS consciousness through the application of SDV’s “12 Golden Rules” program, which covers typical workplace risks and standard safe work practices. New workers are educated in the SDV OHS system during the induction, and subsequently receive specific training according to their trades. The OHS services and the requirements of the OHS system are equally appliable to contractors and suppliers.

With regards to occupational health, the Company has appropriate procedures to identify hazards and risk factors in the work environment and to integrate controls and initiatives to promote the health and wellbeing of workers. With regards to COVID19, the Company has implemented controls and monitoring processes to address risks and exposure to COVID in line with government regulations and good international practices. Implemented measures include COVID awareness raising, social distancing, enhanced sanitation protocols, regular testing, periodic health checks and distribution of PPEs. 

 Resource Efficiency and Greenhouse Gas (GHG)

The Company developed a “Climate Change Statement” issued in July 2021 that formalizes the commitment to continuously explore ways to reduce energy and water consumption, improve efficiencies and reduce emissions and impacts on climate, aiming at achieving “net-zero” for Scope 1 & 2 emissions by 2035. The power supply for the Project is currently based on diesel generators, but work is underway to support the transition and replacement from these generators to a more sustainable energy mix with the incorporation of a small photovoltaic (PV) power plant during the development phase of the Project. 30% of the Project's power needs will be supplied by a 3.3MWp solar power plant (tendering process ongoing) and complemented by onsite diesel generators (~5MW total capacity). Estimated annual GHG figures for Scope 1 & 2 during the first years of operations until the PV plant is installed are 41,000 tonsCO2eq. GHG emissions will be significantly reduced once the PV plant becomes operational.

With regards to water resource minimization and management, Allkem has analyzed different technologies for LCE production, and included environmental considerations such as water use, use of chemicals, and energy consumption in the alternative analysis. The process is based on natural evaporation that reduces overall power requirements. The Company selected the flowsheet with the lowest water and energy consumption, which was validated through bench scale test work in the onsite pilot plant.

Argentinian authorities issued a ground water extraction permit to SDV in 2020 from the shallow aquifer near Rio Los Patos. Permitted extraction volumes (130 m3/hr per well) are sufficient for all project stages of operations for processes and cleaning. It is expected that the Project will only use a fraction of the permitted volume in operations (40m3/hr) and is always exploring ways to enhance resource efficiencies. No surface water is extracted directly from the river. Brine will be extracted from the deep aquifer underneath the Salar.  Water will recirculate within the industrial process, and the extraction process has been designed to minimize raw water consumption. SDV will be installing systems to prevent salt or brine from leaking into the shallow aquifer (e.g., waterproofing base of salt piles, geomembranes underneath the evaporation ponds, monitoring wells, etc.)

The process plant will require input of 320 million liters per year of extracted ground water (equivalent to about 10 L/s). The water quality analysis indicates that the extracted ground water is not suitable for human consumption due to the high concentration of salts and metals (Arsenic, Boron and Sulfur). A reverse osmosis modular plant will be installed to produce demineralized water.

Water Management

The hydrology of the salt flat and its surroundings is regulated by the Los Patos River which creates the delta and braided streams that filter into the salt flat. This river system feeds into two lakes: Laguna Verde and Laguna Catal. The river also forms several wetlands (“vegas”) existing parallel to the river, such as Vega Parinayu´, as well as scattered vegas in the delta. Brine will be extracted from a deep aquifer within the Salar at depths between 200 and 300 m.

The hydrogeologic surveys, studies, data interpretation and modeling conducted to date by the Company and third-party consultants indicate potential for limited impacts to shallow aquifers and surface water bodies as a result of brine extraction during the modeled timeframe of 40 years of operation. However, recognizing that a more detailed assessment is required to manage water resources as the Project evolves, Allkem has prepared a “Water Studies Roadmap” (WSR) with the support of specialized water resource consultants to better assess connectivity across the aquifers and surface water features and provide assurance that any potential impacts on ground water resources and in turn on the biota and ecosystem services will be properly managed during the project life cycle and to distinguish effects related to the SDV project from any effects caused by other operations or from natural changes in the environment, including climate change. The roadmap describes Allkem’s approach and planning to establish a wide-ranging water resource management strategy that will be progressively implemented during the development of the Project as data is generated from the well field and hydrogeological assessments and modelling are updated.

As part of the WSR, and as required in ESAP item # 09, SDV will: (i) conduct ecological flow studies  of the Rio Los Patos, the vegas and lagoons in the area of influence of the Project, considering seasonal and longer-period variations as well as climate change effects; (ii) update the water balance incorporating the effects of climate change over the life of the operation; (iii) update and enhance the hydrogeological model running scenarios to estimate effects of the project on the shallow aquifer and surface waters; (iv) develop a comprehensive surface and groundwater water monitoring program that builds on the monitoring program approved in the ESIA and designed to capture data that will show effects of pumping brine and/or raw water for the process, including potential drawdown effects on shallow surface waters and areas of valued habitat. The monitoring shall include the survey of water sources and extraction points of any potential stakeholder in the vicinity of the Salar and be participatory in nature. Monitoring will be undertaken to the extent it is within the control of the Project; and (v) design and implement an adaptive management plan for environmental protection on the basis of the updated model, its annual calibration, defined alert levels and obtained results from environmental surveys and the comprehensive water monitoring program implementation.

Although Allkem has installed a number of culverts in the main roads and stream crossings to prevent adverse impacts, soil erosion or changes to the water flow and dynamics, SDV is required per ESAP item # 10 to: (i) conduct a superficial flow survey and baseline to document and assess whether existing or future infrastructure of the Project could alter natural flow patterns and water streams within the Los Patos delta environment and vegas and potentially reduce surface water runoff, (ii) based on the survey results design and install adequately sized culverts and other crossings drainage systems, including modifications or improvements to existing drains as appropriate, (iii) document the legacy areas affected by past extraction of borates and ulexite that are not related to the Project, (iv) include the assessment and monitoring of the effectiveness of any installed road culverts, drainage systems and road crossings by including monitoring points upstream and downstream of these intersections.

Pollution Prevention and Control

Pollution prevention is integrated into the Company’s environmental management system. Allkem has developed and implemented different management and monitoring plans to ensure their activities are conducted so as to minimize adverse impacts on human health and the environment, including for areas under the direct control of the Company, and areas managed by contractors and subcontractors. Good housekeeping and adequate segregation of waste was observed during site visits and observed pollution prevention measures are commensurate to the nature of the activity and the corresponding risks and impacts.

Waste Management

The environmental permit allows for dry stocking of discarded salts in certain designated areas away from potential receptors. Allkem has a mineral waste management plan that establishes disposal and reuse methods of mineral waste depending on the harvested salt composition and aiming at minimizing potential environmental impacts. Halite salts will be used in the construction of expansion pond strings and onsite infrastructure, Muriate salts are to be separately stored in dry stocks in the event that they are required for a salable potash product, and Calcium Carbonate salts will be reused to build catchment bunds.

Allkem has a waste management program aligned with the principles of waste management and mitigation hierarchy, good international industry practices and regulations at the national and provincial levels. Waste is segregated at source, collected and classified in hazardous, non-hazardous, recyclable and non-recyclable waste streams, temporarily stored in dedicated storage facilities, and disposed-of following local regulations and procedures. Liquid domestic effluents from the camp, workshops and the future processing plant will be collected and treated in an activated sludge wastewater treatment plant with effluents monitored against Project standards. Portable toilets are deployed in construction work fronts and effluents collected and trucked to authorized facilities. For the operations phase SDV will install a lined emergency control pond (or “pileta de eventos”) to adequately store any discarded production batch.

Hazardous Materials

The Project will use some hazardous substances as part of the Lithium carbonate processing. Milk-of-lime (mixture of calcium Di-hydroxide and water) is used to partially remove impurities and a caustic soda solution (sodium hydroxide) is used for softening and precipitate calcium and magnesium. Additional chemicals used in the Project may include solvents, paints, cleaning agents, lubricant oils, diesel fuel and others. All the hazardous substances and materials are handled through SDV’s hazardous materials procedures and management plans. These define OHS and environmental provisions for the safe transportation, handling, storage and use of hazardous materials, including emergency response. Compliance with the provisions of these plans is verified through SDV’s assurance process, and if any deviation is observed, corrective actions are defined and monitored to completion.  

 The ESIA did not identify potential material negative impacts to health and safety of communities. SDV manages community health and safety through its Code of Conduct that applies to all workers and its Community Relations’ Plan managed by the community relations team. SDV manages any project impacts to people through their active stakeholder engagement program and through the grievance mechanism which provides options for community members to submit grievances related to SDV operations or to workers. Workers are housed at the campsite, minimizing risk to communities from cultural changes and the potential of influx-related gender-based violence or introduction of new diseases. It is anticipated that the project will have positive impacts on the health of workers and their families due to the access to private health care coverage provided by SDV. As part of the Community Relations’ Plan, the Project has a Community Health and Wellness Program that promotes collaborative actions with the local population and includes primary (emergency) medical care for people living in the Salar, who would otherwise not have access to public health services. Participatory water monitoring will mitigate concerns that stakeholders have regarding negative impacts to water volume and quality.

Security Personnel

SDV uses a government-sanctioned security contractor to provide protective services for its facilities.  In total 12 unarmed security guards are distributed throughout its operations - two (2) in Antofagasta de la Sierra (1 guard per shift) and 10 at the campsite (5 guards per shift). In addition, Allkem has assigned 2 direct hire security chiefs to monitor the guards and to provide training in SDV policies and procedures. All guards must pass background checks and receive training on Human Rights, use of force, the Code of Ethics, and company specific security operations prior to being assigned.  SDV does not have MOUs with public security forces, but additional security support from the Catamarca Police Force is available as needed.

As per ESAP item # 11, the Company will conduct a Security Risk Assessment to identify potentials risks to the project as well as potential risks posed by security arrangements to those within and outside facilities and assess whether such private security personnel are being vetted, hired, equipped, and trained adequately. Based on the assessment, the company will develop a Security Forces Management Plan for managing private security forces to avoid potential harm to employees, communities and other stakeholders. This plan should include formal procedures for reporting, responding to and documenting security incidents, training requirements including GBVH prevention and management, and review of security records of security contractors, and be communicated to relevant stakeholders consistent with IFC PS4. 

 SDV is located in the Central Andean Dry Puna Ecoregion (WWF), which is characterized by grassy vegetation and shrubland steppe habitats that have historically supported livestock grazing and firewood collection by local communities, as well as salt-crust desert (salt pan). Other characteristic features include streams, rivers, bofedales (bogs), vegas (type of wetland), lakes and salt flats (locally known as salares). The project site is located within the hydrological basin of the Salar del Hombre Muerto, which is recharged by the Rio Los Patos and includes the salar and several vegas.  The project site is situated within the Salar del Hombre Muerto Key Biodiversity Area (KBA), which is also an Important Bird and Biodiversity Area (IBA).

Allkem conducted biodiversity surveys during their licensing process and has more recently started monitoring fauna and flora at the Salar, in the Rio Los Patos and in its associated vegas.  As described in ESAP item # 12, the Company will update biodiversity monitoring protocols to allow for a better understanding of the variability of biodiversity values both spatially and temporally.

Priority biodiversity values include the Vicuna (IUCN – Least Concern), Shipton’s Mountain Cavy (IUCN Red List LC), the rodent Ctenomys opimus (IUCN Red List – Least Concern), waterfowl species and shorebirds species, Andean Condor (IUCN Red List – Vulnerable), Creamy-rumped Miner (IUCN Red List – Least Concern), Puna Flamingo (IUCN Red List – Near Threatened), Chilean Flamingo (IUCN Red List – Near Threatened), Andean Flamingo (IUCN Red List - Vulnerable ), Horned Cook (IUCN Red List  - Near Threatened ), and lizards (Liolaemus vulcanus and Liolaemus kunza, both IUCN Red List - Least Concern). No Net Loss Natural Habitat requirements will apply for priority biodiversity values, with the exception of the last four priority values where Net Gain requirements will apply based on PS6 requirements.

The project footprint is approximately 1,136 hectares comprising roads, well pads, stockpiles, evaporation ponds and a processing plant. Project infrastructure has been situated to avoid areas of biodiversity value, such as wetlands, vegetated areas and areas of the Salar.  Minimization measures are designed to further reduce impacts such as water efficiency and pollution prevention measures (see PS3 section of this ESRS) as well as the restoration of temporary sites and sites after mine closure.  Per ESAP item # 13, the Project will develop a dedicated Restoration Plan for camps, roads, evaporation ponds and any other sites affected by soil compaction. The Restoration Plan will include methods for soil restoration and revegetation, targets, metrics and a timeline (prioritizing sites no longer in use, as possible) and will be developed by a botanical specialist. As presented in ESAP item #10 of PS3, the client will install a system of culverts to ensure there is no alteration of the water flow from Rio Los Patos to the rest of the Salar to maintain the ecological processes.

Regarding water use, hydrogeologic surveys and modelling conducted to date indicate that project-related impacts on the shallow aquifer and surface water bodies, as a result of brine and raw water extraction, are expected to be low.  As mentioned before in ESAP item # 09 of PS3, SDV will conduct additional studies as part of their water management roadmap, which will include ecological flow studies to ensure that water levels are sufficient to sustain the ecology of flora and fauna within the area of influence of the project as part of No Net Loss (NNL) objectives. 

With respect to Net Gain objectives, SDV is developing a draft Biodiversity Action Plan (BAP), which will be finalized per ESAP item # 14. The draft BAP is based on a feasibility assessment to screen potential offset measures and was conducted by a third-party consultant.  The feasibility assessment considered GIIP offset principles per PS6 and relevant stakeholder consultation as part of offset screening.  A loss/gain assessment was conducted as part of this exercise and included relevant metrics.  The final BAP will focus on the selected biodiversity offset, indicating partners for implementation and an estimated budget and timeline. The final BAP will also include additional conservation actions to promote and enhance the conservation aims and effective management of the KBA/IBA.  Per ESAP item # 15, the client will develop an Offset Management Plan, which will specify the institutional arrangements and sustainable financing for the selected offset, as well as roles and responsibilities for its implementation and will include a Biodiversity Monitoring and Evaluation Program (BMEP) to measure its effectiveness. 

 A supplemental social baseline was commissioned by the company to provide additional information on the residents in a radius of 50 km2. A key component of the study was to assess if any of the local population could be characterized as IPs according to IFC PS7. 

The supplemental social baseline determined that there are people who identify as indigenous in Ciénaga Redonda with 11 households identifying as having Kolla-Atacameño or other type of indigenous ancestry (Catamarca province). Two Indigenous Communities are present in the area, both formally recognized by the government of Argentina, North of the Project area, “Comunidad Andina de Santa Rosa de los Pastos Grandes”, and the newly formed “Comunidad Incahuasi Ratones” in the neighboring basin of the Salar de Ratones and Salar Centenario (Salta province). 

The supplemental baseline study included participatory community mapping to determine, irrespective of legally recognized land ownership, whether project activities overlapped with community cultural, traditional, religious use of land and natural resources. The mapping exercise determined that project activities and facilities did not overlap with indigenous people’s use of land and natural resources. Moreover, the ESIA determined that there will be no material negative impacts to residents in the direct area of influence, and rather there will be multiple positive benefits (including employment, increased access to health care, social investment in schools and productive activities).

The community of Ciénaga Redonda, located approximately 5 kms from the project campsite but in a separate water basin, is home to people who recognize their indigenous ancestry and their attachment to their ancestral territories that surround the community but who do not all self-identify as indigenous because of the perception that to call oneself indigenous means to be opposed to mining, which they are not. Ciénaga Redonda is also home to approximately 10 residents who have agreed to organize themselves along with other residents in the area and be represented by an indigenous leader to form a new indigenous community. This potential indigenous community, Atacameños del Altiplano, has submitted the initial paperwork through the National Registry of Indigenous Communities (RENACI) managed by the National Institute of Indigenous Affairs (INAI – the Spanish acronym).  The presence of SDV does not have any effect on the formalization of the Atacameños del Altiplano should RENACI accept the community’s petition.

Based on the extensive social baseline and assessment studies conducted, IFC’s appraisal which included a site visit and interviews with community members and review of information provided by the Company, Free Prior Informed Consent (FPIC) does not apply to this Project for the following reasons: (i) the supplemental social baseline carried out indicated that the project does not impact lands and natural resources currently subject to traditional ownership; (ii) there is no physical relocation or economic displacement of indigenous peoples from traditional lands; (iii) there are no significant impacts on critical or cultural heritage or on land or resources that are used for cultural, spiritual or ceremonial aspects; and (iv) the Project will not make use of cultural heritage including knowledge or traditional practices for commercial purposes. The Project will apply Informed Consultation and Participation (ICP) to the stakeholder engagement process

SDV has engaged and consulted with indigenous residents and has established relationships of trust and iterative dialogue along with agreements for social investment. 

As part of ESAP item # 16, SDV will strengthen and maintain an ongoing relationship with Indigenous Peoples based on Informed Consultation and Participation (ICP) throughout the life of the Project.  To further this objective, SDV will, in collaboration with Indigenous Peoples, develop an Indigenous Peoples Framework (IPF) applicable to indigenous communities, and households and other community members or groups within a 50 km radius, outlining actions to be implemented to avoid and minimize any potential adverse impacts, and if needed, compensate any residual impact in a culturally appropriate manner, as well as take action to identify opportunities to enhance the positive effects of the project. The framework will include clear principles and guidance to (i) actively engage IP communities adhering to the principles of ICP, (ii) monitor for potential impacts and assess mitigation measures with a gender perspective, through robust consultation, (iii) enhance positive impacts and benefits through training and social investment programs, (iv) establish mechanisms for monitoring and periodic reporting on each agreement reached with affected communities, (v) ensure accessibility to a culturally appropriate grievance mechanism for indigenous communities. The Framework will be developed in a participatory manner and outline all actions to be implemented. 

 SDV has a Stakeholder Engagement Plan (SEP) that outlines the basic principles for identification and engagement of stakeholders. The SEP establishes the area of engagement as well as responsibility for managing the relationships, channels, and frequency of contact. 

SDV stakeholder engagement and social development strategies initiated with government-sponsored consultation of the Environmental Impact Studies, started in 2013 and concluded with a public hearing conducted by the Ministry of Mines in Ciénaga Redonda November 19, 2021.  SDV has continued to engage communities in the area of direct social influence (Department of Antofagasta de la Sierra) including the communities of Ciénaga Redonda and the “puestos” around the Salar.

The majority of the population in the Province of Catamarca and in the towns and villages in the area of influence   of the Project are generally in favour of mining projects and development and do not oppose Lithium extraction activities. However, during consultations, residents expressed concerns of potential environmental impacts such as to air, as well as dust from increased traffic, and impacts to water quality and availability.  SDV’s consultation efforts have helped create trust with the majority of the local population.  The community understands the mitigation efforts the project is implementing, and the local population generally trusts that the project will manage and mitigate to avoid adverse impacts to the environment and the local population. 

As part of ESAP item # 17, SDV will update and enhance the Company’s “Stakeholder engagement plan” and “Community grievance mechanism” in line with the requirements set forth in PS1 to include disclosure of relevant management plans, establishment of frequency of consultation efforts.

Social Investment

Social investment is an integrated element of core business functions, leveraging available resources and optimizing the long-term benefits for both the operations and the community

Social programs currently undertaken by SDV include local employment and training to enhance employment opportunities, acquisition of local goods and services, promotion of community health and welfare, and social investment in sports, culture and education. The program benefits workers, inhabitants from Ciénaga Redonda and Antofalla. Several social investment initiatives have risen out of the engagement process including a commitment for local hiring, construction of a secondary school in El Peñón,school cafeteria in a primary school in Villa de Antofagasta, and construction of a health post in Ciénaga Redonda.

External Communications and Grievance Mechanism

SDV implements an Inquiries and Complaint Procedure which is communicated to stakeholders. Complaints are registered in a logbook but are not tracked and reported.  As part of ESAP item # 18, SDV will (i) formalize the Grievance Mechanism in alignment with PS1; (ii) ensure adequate monitoring, tracking and closure of grievances; and (iii) broadly communicate the procedures to stakeholders; (iv) report results internally and externally as appropriate.  

 Contact Person: Juan Martin Mascarenhas

Company Name: Allkem Limited

Address: Carlos Pellegrini 1427, Piso 4 Buenos Aires Argentina 1011

Email: martin.mascarenhas@allkem.co

Phone: +54 9 11 5507 9307