Australian, Chinese Companies Face Off to Control DR Congo Lithium Mine
- May 24, 2022
- Posted by: Quatro Strategies
- Category: Mining
Australia’s AVZ Minerals Ltd. is fighting to regain control of what could be the world’s largest untapped lithium deposit in the Democratic Republic of the Congo (DRC) against ownership claims from Chinese companies.
AVZ’s interest in the Manono lithium project in the DRC could fall to 36% from 75%. That may follow its planned sale of a 24% stake this month and lawsuits from companies, including China’s Zijin Mining, which claims ownership.
The best case scenario for AVZ would be to face a months or years long legal battle, the worst case scenario would be to lose control of Manono.
As AVZ waits for permission from the Congolese government for Manono, it extended suspension on trading its shares until June 1. The company has a market capitalization of about A$2.75 billion ($1.9 billion), and its shares had soared more than 400% over 12 months.
DRC is home to a large amount of materials needed in the transition to clean energy, including lithium. It’s the world’s largest producer of cobalt, another key ingredient in electric vehicle (EV) batteries. Chinese companies have moved aggressively to secure supplies from the central African country, and now control about half of Congo’s cobalt output and approximately 70% of its copper production.
In China, the world’s biggest EV market, lithium prices have climbed more than 400% in the past year, stabilizing in recent months as stringent Covid restrictions weigh on manufacturing.
The Perth-based AVZ said earlier this month it was “days away” from securing its mining permit. A week later, it announced that Zijin had requested arbitration at the International Chamber of Commerce in Paris to claim a 15% share of the mining project that it says it acquired from state-owned miner Cominiere last year.
Zijin said in a May 9 statement that it had followed the law and complied with the joint venture agreement for the Manono project.
AVZ said the agreement is groundless because it has the right to preempt any share sale by Cominiere, which currently holds 25% of the project. The company says it has been in discussions with the government to acquire the 15% itself.
AVZ is already set to sell a 24% stake in the project to Chinese battery maker Suzhou CATH Energy Technologies at the end of this month for a $240 million investment.
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