Allkem share price sinks 5% amid Mexico lithium deposit speculation

Falling ASX share price represented by shocked Investor looking at phone.Falling ASX share price represented by shocked Investor looking at phone.

The Allkem Ltd (ASX: AKE) share price has had a tough end to the week.

Allkem shares fell 5.3% today to $14.84. For perspective, the S&P/ASX 200 Materials Index (ASX: XMJ) dropped 0.49% today.

Let’s take a look at what could be impacting the Allkem shares.

Allkem among ASX lithium shares to struggle on Friday

The Allkem share price may have fallen today, but it was not alone among ASX lithium shares. The Core Lithium (ASX: CXO) share price fell 1.96% today, while Sayona Mining Ltd (ASX: SYA) fell 5% and Pilbara Minerals Ltd (ASX: PLS) dropped 1.82%.

News out of Mexico could add to lithium supply in the future, potentially putting downward pressure on lithium prices.

The nation has a lithium deposit that could be worth billions, Reuters reports.

A lithium deposit in the Mexican state of Sonora is said to be worth 12 trillion Mexican pesos, according to the government. This is equivalent to $909 billion Australian dollars.

On 24 August, Mexican president Andrés Manuel López Obrador set up a state company, LitioMx, to mine lithium. This is due to operate in February, 180 days after the decree to set up the new company was published.

The Allkem share price hit a yearly high of $15.99 on 13 September. Allkem is involved in multiple lithium projects including the Olaroz, Sal de Vida and Cauchari projects in Argentina, the Mt Cattlin project in Western Australia, the Naraha project in Japan, and the James Bay project in Canada.

Bell Potter rates Allkem as a buy and has placed a $21.58 price target on the company’s share price.

AKE share price snapshot

The Allkem share price has lifted 67% in the past year, while it has gained 43% year to date.

For perspective, the ASX 200 Materials Index has gained nearly 0.9% in the past year.

Allkem has a market capitalisation of $9.46 billion based on the current share price.

The post Allkem share price sinks 5% amid Mexico lithium deposit speculation appeared first on The Motley Fool Australia.

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Motley Fool contributor Monica O’Shea has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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