AVZ's battles do little to stem investor fears about the risks of operating in Africa, and the grip Chinese interests have on the continent.
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High Voltage: Robert Friedland says the Congo is ‘best place in the world’. AVZ Minerals shareholders probably disagree
Mining
4 hours ago |
Reuben Adams
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- AVZ’ problems compound with cancelation of mining licence decree for Manono lithium project
- Shareholders remain in limbo, with AVZ in suspension since May 2022
- Aussie-based firm Recharge Industries has been named as the preferred bidder for collapsed battery builder Britishvolt
Our High Voltage column wraps all the news driving ASX stocks with exposure to lithium, cobalt, graphite, nickel, rare earths, manganese, magnesium, and vanadium.
Mining legend
Robert Friedland used a recent Ivanhoe Mines call to take a swipe at the ‘African discount’ — commonly applied by analysts on account of the political risks of operating in parts of Africa.
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C$15 billion capped Ivanhoe is now two years into production at the Kamoa-Kakula copper mine in the Democratic Republic of the Congo alongside its JV partner, China’s Zijin.
The largest Tier-1 development in years, the operation is a roughly 400,000tpa copper mine at an industry leading grade of almost 5%.
But not everyone is enjoying the same success in the DRC,
ranked third last only ahead of Spain and Zimbabwe on the mining investment attractiveness index released last year by the Fraser Institute in its annual survey of mining companies.
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AVZ Minerals (ASX:AVZ), which had been plugging away at its world class Manono lithium-tin project in the DRC since 2016 and in 2022, was getting ready to pull the trigger on development.
Manono is objectively a standout lithium project. According to the company, it is:
- the biggest undeveloped deposit in the world
- the second highest grade undeveloped deposit in the world
- in the bottom cost quartile for production globally, and
- in the bottom quartile for greenhouse gas emissions
In a late 2021 interview,
Stockhead asked AVZ managing director Nigel Ferguson whether the DRC’s reputation as an unstable mining jurisdiction was a worry for investors.
This is what he said:
“It gets a really bad rap, but I have been operating there since 2004, and had no issues whatsoever,” Ferguson says.
“Yes, there is bureaucracy, but it is Africa, so you deal with it.
“I will say that President Tshisekedi has been cleaning the place up. The business environment is improving. He has been courting a lot of people over in Europe and the US and there are a lot of companies starting to come back into the country.
“BHP are chatting with Robert Friedland, talking about coming back in. Meanwhile, you have the likes of Barrick and AngloGold Ashanti with their $US1.7bn, ~800,000oz Kibali gold mine in the north.
“Friedland’s Ivanhoe Mines has got the massive Kamoa-Kakula copper mine up and running and is now staging it to expand operations. I see it as a country where there is zero risk geologically. You can find big projects there.”
“Zero risk geologically”, maybe.
The Manono project. Pic: AVZ Minerals
The first sign of trouble came April last year, when AVZ shares plummeted 57.6% in a matter of weeks from a record $1.33.
The former ASX 200 company was then suspended at 78c in May after it was revealed the aforementioned Zijin Mining had laid claim to a 15% share of the Manono project, which AVZ said it had the right to buy from Congolese State mining company Cominiere.
Separately, one of the JV partners Dathomir, off which AVZ claimed to have bought a 15% stake, reportedly pulled out the deal, something AVZ said it was not able to do.
The upshot is this: Zijin claims AVZ’s stake in Manono, after a planned 24% sale to Chinese battery manufacturer CATH,
will come to just 36%, not the 66% AVZ thought it would have.
The project and its stakeholders have been tied up in ongoing arbitration/legal proceedings since then.
Then, another blow. On February 6, AVZ admitted that a mining licence decree announced May last year had been revoked by the DRC Government.
The
Australian Financial Review says this announcement to the ASX only came after
it sent AVZ the new ministerial decrees, dated January 28, over the weekend.
The embattled company is seeking independent legal advice regarding both Ministerial Decrees dated 28 January 2023, “whilst expediting discussions to clarify the intentions of the competent DRC authorities”.
These hijinks will do little to stem fears from within the investment community about the
jurisdictional risk involved in operating in Africa and the grip Chinese business interests have on the continent.
AVZ Minerals share price chart
Aussie firm buys bankrupt battery maker Britishvolt
Aussie-based firm Recharge Industries has been named as the preferred bidder for collapsed battery builder Britishvolt, which entered administration 17 January this year.
Britishvolt was building a 30GWh battery ‘Gigaplant’ in Cambois, Northumberland, and had already signed memorandums of understanding [MoU] with five separate OEMs, including Lotus and Aston Martin.
Cumulative customer demand across MoU, JDA and pre-offtake agreements exceeded 8GWh in 2025, Britishvolt said September last year.
Recharge is seperately planning to build a 30GWh battery plant co-located with suppliers – like lithium chemical and cathode/anode production — near Geelong in Victoria.
Fastmarkets NewGen analyst Jordan Roberts says it is perhaps a little surprising Britishvolt has not gone to one of a number of British bidders.
“However, few can have any complaints if it provides the necessary injection to progress into production, vital to securing the future of UK car manufacturing,” he says.
“Recharge’s intentions for the Britishvolt business have not been detailed, but its US ownership and location in Australia, may finally provide the missing pieces of the jigsaw (capital, raw material supply and customers) to get the project off the ground.”
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