Chinese, Australian investors are fighting for the largest lithium deposit

Article content

Michael J. By Kavanagh

(Bloomberg) –

AVZ Minerals Ltd. of Australia According to Boatman Capital, Chinese investors are fighting for control of possibly the world’s largest unused lithium deposit amid claims of ownership.

AVZ’s interest in the Manono lithium project in the Democratic Republic of Congo could drop from 75% to 36%, London-based shortseller Boatman said in a research report on Friday. This could follow a planned sale of a 24% stake this month and a storm of lawsuits from companies, including Jizin Mining Group Co., claiming ownership, according to documents released by Boatman Show.

Article content

“At best, AVZ faces legal battles of months or years,” Boatman said in a report, citing claims by a Georgian subsidiary. “Worst of all, AVZ will lose control of the manor.”

AVZ said on Friday that it had extended the voluntary suspension of its stock trading on ASX until June 1, stopping the sale and purchase of shares on May 9 as it waited for the Congolese government’s approval of Manono. AVZ, with a market capitalization of about A $ 2.75 billion ($ 1.9 billion), has grown by more than 400% in 12 months.

Congo is an important source of materials needed for clean energy conversion. It is the world’s largest producer of cobalt and holds huge deposits of lithium, both key components of electric-vehicle batteries. Chinese companies have moved aggressively to secure supplies from Central African countries, and now control about half of Congo’s cobalt output and about 70% of its copper production.

Article content

Read: China has built a Congo toll road that leads directly to the ruling family

In China, the world’s largest EV market, lithium prices have risen more than 400% in the past year, stabilizing in recent months as tighter covid restrictions have affected production.

The Perth-based company said earlier this month that securing its mining permit was “a matter of days.” One week later, it announced that Jizin’s Jin Cheng Mining Company Limited had asked the arbitrator to claim a 15% stake in the mining project in the International Chamber of Commerce in Paris, saying it had acquired the state-owned Mining Workers’ Commission last year.

Boatman has unveiled a deal that shows Jin Cheng has agreed to pay য়ার 33.4 million to Communier for the partnership.

Article content

Jizin said in a May 9 statement that it had complied with the law and accepted the joint venture agreement for the Mano Mano project. “Jizin Mining will actively defend its legitimate rights and interests, and will continue to address future issues through litigation and arbitration,” it said.

AVZ and Jizin did not immediately respond to a request for comment.

‘Unqualified contract’

AVZ said the deal was “unqualified” because it had an advance right to sell any shares by Comminiere, which currently holds 25% of the project. The company said it was in “advanced negotiations” with the government for a 15% acquisition.

Congolese Minister of Mines Antoinette N’Samba Kalambai and Cominar’s managing director Athanas Mowamba Misao did not respond to separate requests for comment Friday.

Article content

AVZ is ready to sell a 24% stake in the project to Chinese battery maker Suzhou CATH Energy Technologies later this month for a 240 million investment. That’s about five times the price per share in the Communier-Jin Cheng agreement.

The dispute with Gijin is not the only AVZ shareholder battle over ownership of lithium deposits. Last year, the company said it had paid at 20 million to Dathomir Mining Resources Sarl for a 15% stake in the project, bringing its total shareholding to 75%. Now the company, owned by Cong Mao, a longtime Chinese investor in Congo, has filed a lawsuit in Congo seeking to cancel the deal. AVZ’s affiliate is appealing.

On Friday Kong responded to an email requesting immediate comment.

The project is planned to develop the first lithium mine in the Congo. According to AVZ, Kong’s company, Soci ডিt de Gastin Router du Congo, is managing the rehabilitation of a 290-mile-long export route from Manono at a cost of about 5 285 million.

© 2022 Bloomberg LP

Bloomberg.com