Important milestones on the journey of AVZ, AVZ International, Green Lithium and Dathcom Mining SA
November 9, 2023 Mining
Share
We must go back to history to understand the plan put in place by certain Congolese to downgrade Dathcom Mining's AVZ to the detriment of the populations of Manono, the Congolese lithium industry and the Manono Special Economic Zone.
A quick reference to the company structure reveals this:
- AVZ Minerals Limited is the parent entity established in Australia and listed on the ASX (Australian Stock Exchange);
- AVZ International Pty Ltd is a wholly owned subsidiary of AVZ Minerals, formed to hold the direct interest in Dathcom Mining SA, the 75% joint venture owned by AVZ following the purchase of 15% of Dathomir under a commercial contract between the parties ;
- Green Lithium Holdings, based in Singapore, is a wholly owned subsidiary of AVZ Minerals and is to be used for investment in the development of the Manono project;
- Dathcom is the joint venture entity formed in the DRC, originally by Dathomir and Cominière and today owned 25% by Cominière and 75% by AVZ Minerals International.
As part of the joint venture agreement with Cominière, the AVZ group is responsible for the management and financing of all Mining Permit activities, having spent more than $110 million on the project to date and bringing it to the construction phase in record time. The Definitive Feasibility Study (
DFS ) which must be submitted during the 4th year following the initial period of granting of the Permit was submitted in the third year and received all favorable technical opinions required by the Mining Code.
To achieve this, AVZ worked with various government services including a few ministries, the most concerned of which are as follows:
1. MINISTRY OF MINES
has. INTRODUCTION
Exploration from 2017, establishment of inferred, indicated and measured resources and finally calculation of reserves which define the SIZE and world ranking of the deposit by AVZ, completion and publication of the feasibility study and environmental studies by AVZ in April 2020 .
Submission of feasibility and environmental studies in May 2021. The company ''Dathcom Mining SA'' (''
DATHCOM''), has scrupulously followed the requirements of the Congolese Mining Code as amended on March 9, 2018.
Dathcom Mining SA believed in the writings and the spirit of the Congolese Mining Code when the legislator reassures that the procedure for granting mines and issuing mining and quarry titles must take place “with complete transparency, objectivity, efficiency and
speed in the reception, instruction, decision and notification processes” and that it is strictly applied to article 32 of the Mining Code of March 9, 2018.
To this end, the applicant had submitted its application for mining rights to the Mining Cadastre (CAMI) in strict compliance with the procedures provided for in articles 35 (the documents to be filed), 36 (the files were filed in French), 37 ( payment of filing taxes), article 71 of the Congolese Mining Code and other provisions of its Mining Regulations.
Below is the timeline (with some steps) that summarizes this process.
Obtaining favorable environmental and cadastral opinions without any problem.
b. THE CAUSE OF THE GREAT DERAILMENT
It is with the publication of the feasibility study that the problems begin for AVZ in the midst of the era of "green energy" and trying to develop one of the largest lithium deposits which interest the powerful and the without scruples of this earth.
The request for conversion of PR13359 into an EP is not going smoothly and AVZ realizes this very quickly after going through two important stages of the process: favorable opinions for the environmental and cadastral aspects. As for the technical aspect, the last step before conversion, the first obstacle is seriously posed by the partner representing the State. It is already December 2021.
Without our knowledge, the partner writes to the department head to tell him not to give a favorable opinion because the feasibility study contains erroneous facts. The head of the department informed us because we were not copied and finally organized a tripartite meeting between his department, AVZ and the partner representing the State. The latter is not up for it and apologizes. On the day of the meeting, AVZ shows up and learns that the partner has apologized.
The partner essentially complained that AVZ had not explored the full extent of the PR13359 mining concession. This is all the more true as Dathcom carried out initial reconnaissance, sampling and mapping of the entire permit, followed by further excavation of wells and trenches, and concentrated its drilling campaign in the south, where most of the geological knowledge from historical mining activities was available. Parentheses, the mining exploration of a mining concession is not done in its entirety, there are numerous examples of this because it is necessary to renew the reserves which are consumed by current mining.
To move forward, the director of the mines department proposes a way out of this first crisis. He proposed in writing that the permit be divided into 2 with a PE in the southern part and a Pr in the northern part. This was done later but not officially announced because Dathcom Mining SA did not receive any notification.
The day after the written proposal, the chief director of the Ministry of Mines left his post.
A first indication that there was some sort of manipulation behind the close-up of popular opinions.
The second scene of the project is the proposal coming from its hierarchy according to which we must abandon the northern part so that the southern part is converted into PE because the government would like to go to other investors, other than AVZ. However, there have been several discussions on this subject with several interlocutors
“mandated by the government” .
One of these variants proposed by AVZ was for AVZ to remain in the northern part of the joint venture by injecting $20 million into exploration, because the company understood the geology of the area better than anyone after its experience of almost four years after drilling in hard rock (bottom) and eastern quarry (still in its early stages) to accelerate the exploration process to feasibility study, retaining 60-65% AVZ and 35%- 40% from the government.
THERE WILL BE NO FOLLOW-UP OF THIS PROPOSAL.
DATHCOM MINING SA CLAIMS THE ENTIRE PERIMETER OF 221 MINING PLOTS BECAUSE IT IS AN EXPROPRIATION IN DUE FORM.
Finally, what was happening behind the curtain materialized, the appearance of a subsidiary of Zijin with its proposal to buy 15% of the 25% of the shares of the partner representing the State by defying the right of pre-emption of AVZ within the company Dathcom Mining to participate in the development of the famous Manono deposit. The process of respecting AVZ's right of pre-emption was not respected.
Beyond this aspect, the General Inspectorate of Finance (IGF) is involved in its investigation into this transaction. The conclusions of the IGF are known to the public: in the name of obtaining the means of exploitation, Cominière sold 15% of the 25% of its shares in Dathcom Mining. For IGF, this sale of mining assets authorized by the Ministry of the Portfolio is made in violation of legal provisions. The criminal liability of the management of Cominière as well as that of the Ministry of Portfolio are established, the irregularities noted: encroachment on the prerogatives of the technical body of the government in the choice of independent experts responsible for the evaluation of the 15% of the shares sold , market value of the 15% of Cominière SA's shares in Dathcom Mining sold to Zijin MINING, total squandering of USD 33.4 million of the proceeds from the sale of Cominière's 15% of shares in Dathcom. All this suggests the motivation for the sale: Cominière's quest for money.
In accordance with article 11 of the law on disengagement, the evaluation of assets must be carried out by independent experts under the responsibility of the technical body of the government, which is in this case the COPIREP (Steering Committee for the Reform of Public Enterprises) which is an organ of the State.
Furthermore and contrary to what Cominière declares, the IGF report notes that the transfer of 5% of Cominière to Dathomir as a loan so that the latter can raise funds to renovate the infrastructure is irrevocable and not temporary. The IGF noted that this transfer was final without consideration. Another irregularity.
It is worth noting that here we have two partners from Dathcom Mining who were not very effective in moving the project forward during the exploration and research period before and after AVZ joined Dathcom. These partners became rather harmful and greedy for money as soon as the feasibility study was published with the aim of harming AVZ by using state instruments, influence peddling to gain where they have not invested anything as it This is the case of Dathomir.
This type of Machiavellian plan was reinforced with the coalition of minority partners Dathomir Mining Resources, Cominière and the so-called newcomer – Zijin, whose seemingly coordinated actions against AVZ and Dathcom say more: termination of the purchase contract by AVZ of Dathomir shares, termination of the JV contract, report of the partition of PR13359, dissolution of the company Dathcom Mining, recovery of all squares of permit PR13359 by Cominiere through the Kalemie court as recently registered in the Mining Cadastre, etc. And more recently, the award of the northern part of the Dathcom Mining Research Permit under PR15775 to Manono Lithium SAS, a new joint venture created between Jinxiang Lithium Limited ("Jinxiang Lithium", foreign subsidiary of Zijin Mining Group Co., Ltd) and La Congolaise d'Exploitation Minière ("COMINIÈRE"), in which Jinxiang Lithium holds a 61% stake and Cominière holds the remaining 39% stake.
The northern part (125 mining squares) was the ultimate objective of the Chinese whatever the means used, while the southern part (96 mining squares) is the subject of a force majeure notice. Everything is completely illegal. Thus, AVZ, GREEN LITHIUM and DATHCOM jointly seized the Paris Commercial Court and the International Center for the Settlement of Investment Disputes for the settlement of all of these disputes in compliance with the Mining Code regarding the arbitration. However, AVZ, Dathcom and GREEN LITHIUM remain willing and in good faith to reach a fair amicable settlement with state officials in the Democratic Republic of Congo.
The important question is this: is it in the interest of the DRC to give another pillar of green energy and energy transition to a Chinese player in the DRC while the country's copper and cobalt sector is very used and sought after by the whole world in the development of green energy is dominated by the Chinese including Zijin with a sulphurous reputation if we consider the relationships of Civil Society and the standoff with Gécamines? The coherent mining policy requires a diversification of actors taking into account geostrategic balances without ignoring the commercial and technological struggles between China and the West. The DRC's mining economy must stop being dangerously dependent on China.
Having detected and understood the Machiavellian plan put in place to dislodge AVZ, the latter favored a dual approach: negotiate at home (in the DRC) and go to court outside. Obviously, the first step in the approach to a lasting solution takes precedence, as some may think.
2. MINISTRY OF INDUSTRY
In order to contribute to the development of the country by giving added value to minerals and investing in industrialization, AVZ has collaborated transparently, as required by the principles of the Australian Stock Exchange, with the government including the Ministry of Industry in the following way:
- Presentation of its motivation in 2019 for the Manono Economic Zone to strengthen the value chain for the manufacturing of precursors used in electric vehicle batteries;
- Suggestion for the development of an Industrial Code;
- Signature of the memorandum of understanding with the Ministry of Industry in February 2020;
- Holding of several workshops with multi-sectoral government stakeholders with the aim of signing a development agreement including a Manono Economic Zone which the Head of State, His Excellency Félix-Antoine Tshisekedi Tshilombo, spoke about during his speech on February 5 at the international mining forum Mining Indaba which is held annually in Cape Town in the Republic of South Africa.
The text of the development agreement and the related decree were drawn up by an interministerial commission. Both documents were sent to the Government Secretariat in August 2021, which referred them to the Ministry of Justice for review. AVZ and Dathcom are waiting for them to this day.
An interministerial delegation was even sent to South Africa by the Congolese State to assess AVZ's financial capacity to finance the different aspects of the project with different financial institutions: mining (mine, processing), infrastructure ( logistics, roads, electricity and water) and processing (Manono special economic zone).
AVZ and Dathcom are still awaiting the report of the said Commission but realize today that their detractors were already at work without their knowledge and without respect for the laws or business ethics.
3. MINISTRY OF ENERGY AND HYDRAULIC RESOURCES
AVZ worked with the Ministry of Energy and Hydraulic Resources to resolve the energy issue in the Manono area.
Thus, in July 2019, there was submission of the expression of interest from AVZ POWER for the rehabilitation of the Mpiana-Mwanga 1 and 2 hydroelectric power stations, respectively approximately 90 and approximately 70 years old each.
This expression of interest is welcomed by the ministry. Several joint missions between AVZ POWER, Cominière and the Ministry were carried out to take stock of the situation.
A memorandum of understanding was signed in January 2020 with the aim of producing feasibility and environmental studies to obtain the concession. And that's what happened.
Environmental studies and certificates are submitted to the ministry two years later. A multidisciplinary commission responsible for evaluating the feasibility study has been set up by the Ministry. The commission delivered its favorable opinion to the ministry after two days of work. The Minister of Energy and Hydraulic Resources signed the favorable opinion in March 2022 and recommended that AVZ POWER move to the next step, which is obtaining the concession. There was no further sequel. Everything was blocked somewhere in the administration by political heaviness to the detriment of the development of the country and communities.
Once again, AVZ's detractors were unwittingly at work. When AVZ and Dathcom prioritize the law and business ethics, detractors rely on political and non-legal networks. This is a blow to the business climate and governance of the mining sector in the DRC.
4. MINISTRY OF THE PORTFOLIO
In October 2019, AVZ wrote to the Ministry of Portfolio to inform it of the express reason for purchasing the 15% stake in Cominière, as the latter had expressed the wish to do so in order to be able to finance its own activities. The Australian group wanted to contact the supervisory or supervisory authority directly in order to move things forward.
Minister Clément Kuete's response was simple and summed up as follows: wait for the reorganization of the Cominière Board of Directors as well as the results of the feasibility study to know the true value of the said shares. Which AVZ accepted and found normal.
In July 2021, AVZ received a vague communication from Cominière indicating, without details of the offer as required by law and custom in this area, that ZIJIN wished to purchase 15% of its 25% stake in Dathcom Mining and that its Board of directors as well as the Extraordinary General Meeting of Dathcom agreed. AVZ reminded Cominière of his right of pre-emption and the letter from Minister Kuete about it.
But events continued differently from September 2021 to November 2021: letter from the Minister of Portfolio approving the transaction, transfer contract between Cominière and JIN-CHENG (ZIJIN), letter to AVZ on the transfer of shares to JIN CHENG, General Meeting Extraordinary of Dathcom without AVZ to approve the transaction, ad hoc representative to chair the Extraordinary General Meeting, filing of the minutes for modification with RCCM at the Commercial Court in Lubumbashi, etc. Quite well in illegality and violation of the laws of the country without moving anyone. Nothing can be explained legally except politically.
The last communication from Zijin on the agreement with Cominière concerning the Northern part of the Dathcom License dated October 23, 2023 made in Hong Kong arises from the meeting which was held between the Minister of the Portfolio and Zijin already on the date of August 15, 2022, during which the development of the northern part was discussed in favor of the joint venture composed of Zijin 71% and Cominière 29% without reimbursement of $33.4 million. A document from ZIJIN dated October 21, 2022 sent to the Congolese side to resolve the blockage of Dathcom by taking its northern side circulated on social networks, and never denied or contradicted by the parties concerned.
However, it should be noted that the announcement of October 23, 2023 shows different figures in the shareholding of the Manono Lithium joint venture and the different financial counterparties.
However, the situation is still illegal because AVZ who led the exploration, and the investment was not consulted.
5. CONCLUSIONS AND RECOMMENDATIONS
AVZ Party believes in amicable resolution of all disputes by envisioning justice that respects fairness and everyone's rights for the benefit of stakeholders, including the Manono community and the company's shareholders. Cominière swears by the dissolution of Dathcom and Dathomir fights for AVZ's money without worrying about his fate in the joint venture.
At this stage, only the involvement of the President of the Republic and the Head of State, because the reputation of the country in terms of the business climate and as a country of solution in terms of climate is at stake, will help. to fairly and sustainably resolve this dispute taking into account the unfortunate jurisprudence of ''First Quantum Minerals'' under the regime of its predecessor and that of ''Vedanta Limited'' at Konkola Copper Mines in Chingola in Zambia where its counterpart Hakainde Hichilema has just resolved a dispute, pitting the Indo-British group against the Zambian State and its company ZCCM-IH (
Zambia Consolidated Copper Mines Investments Holdings Limited ) - their Gécamines -, which was before arbitration in London since 2019 under his predecessor Edgar Lungu.
According to several sources, the United States Embassy in Kinshasa is closely monitoring this matter and informs all potential American investors to await the outcome of the AVZ affair before any planned investment in the face of any proposal made to them on the Permit. from Dathcom.
Everything suggests that irreparable damage is being caused to the country as a destination for Western investments in the lithium sector because of the standoff between Cominière and AVZ.
The Congolese government and all state officials must continually remember that the United States of America has set up a coalition on critical minerals (lithium, cobalt, coltan, germanium, gallium, copper, etc.) under the name of
''The Minerals Security Partnership'' (MSP) with 13 partner countries including Australia (home country of AVZ), Canada, Finland, France, Germany, India, Italy, Japan, Norway, South Korea, Sweden, Great Britain and the European Union represented by the European Commission.
If Cominière and his Chinese and state accomplices had not blocked Dathcom and revived the curse on this mining permit dating from ''Manomin'', the project's forecasts were that it should be put into production between June-July 2023 and would count as the only new viable mining project of the current mandate of President Tshisekedi and the province of Tanganyika to the great satisfaction of the populations of the territory of Manono and its surroundings.
By now, everyone will have lost nearly 2.5 years because of the gluttonous appetites and hegemonic interests of a few citizens that history will judge objectively. In the meantime, the DRC must diversify its partners in all sectors without falling into the trap of Chinese money, favor mining companies who invest in exploration and research and discourage those who invest in the expropriation of others' studies and permits.
The Chronicle of Ben Nkaya for FKF Softpress.
thestockexchange.com.au
