09/11/2023
It is necessary to go back to history to understand the plan put in place by some Congolese to downgrade AVZ from Dathcom Mining to the detriment of the populations of Manono, the Congolese lithium industry and the Manono Special Economic Zone.
A quick reference to the structure of the company 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 subsidiary 100% owned by AVZ Minerals, incorporated to hold the direct stake in Dathcom Mining SA, the 75% joint venture owned by AVZ after the purchase of 15% of Dathomir under a commercial contract binding the parties;
- Green Lithium Holdings, based in Singapore, is a subsidiary 100% owned by AVZ Minerals and is to be used for investment in the development of the Manono project;
- Dathcom is the joint venture entity incorporated in the DRC, originally by Dathomir and Cominière and now 25% owned 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, has so far spent more than $110 million on the project and has brought it to the construction phase in record time. The
Definitive Feasibility Study (DFS) that must be filed during the 4th year following the initial period of the grant of the Permit was filed in the third year and received all the favorable technical opinions required by the Mining Code.
To achieve this, AVZ has worked with the various government services, including a few ministries, the most concerned of which are the following:
1. MINISTRY OF MINES
a. Introduction
Exploration from 2017, establishment of presumed, indicated and measured resources and finally calculation of reserves that 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.
Filing 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 spirit of the Congolese Mining Code when the legislator reassures that the procedure for granting mines and issuing mining and quarrying titles must take place
"in complete transparency, objectivity, efficiency and speed in the processes of receipt, investigation, decision and notification" and that it is strictly applied to Article 32 of the Mining Code of March 9, 2018.
To this end, the applicant had submitted her 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 deposit fees), Article 71 of the Congolese Mining Code and the other provisions of its Mining Regulations.
You will find below the chronology (with a few 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 troubles begin for AVZ in the middle of the era of "green energy" and trying to develop one of the largest lithium deposits that interest the powerful and unscrupulous of this land.
The request for the conversion of the PR13359 into an Operating Permit does not go smoothly and AVZ realizes this very quickly after going through two important steps in the process: favorable opinions for the environmental and cadastral aspects. As for the technical aspect, the last step before the conversion, the first obstacle is seriously posed by the partner representing the State. It's already in December 2021.
"Unknownst to us, the partner writes to the head of department 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 in copy and finally organized a tripartite meeting between his department, AVZ and the partner representing the State. The latter is not in and apologizes. On the day of the meeting, AVZ introduces himself and learns that the partner has apologized.'' According to Engineer Serge Ngandu, Director of AVZ.
The partner (Cominière) essentially complained that AVZ had not explored the full extent of the PR13359 mining concession. This is all the more true since Dathcom carried out an initial reconnaissance, sampling and mapping of the entire permit, followed by further excavation of the wells and trenches, and concentrated its drilling campaign in the south, where most of the geological knowledge from historical mining activities was available. It is common knowledge that the mining exploration of a mining concession is not done once in its entirety, there are many examples of this because it is necessary to renew the reserves that are consumed by current mining.
"To move forward, the Director of the Mining 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 was 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 position.
A first indication that there was a kind of manipulation behind the close-up of popular opinions.
The second stage of the project is the proposal from its hierarchy that we must abandon the northern part so that the southern part is converted into a PE because the government would like to go to other investors, other than AVZ.''
According to another Director of AVZ.
However, the Australian group claims to have had several discussions on this subject with several interlocutors "
mandated by the government".
One of these variants proposed by AVZ was that AVZ remains in the northern part of the joint venture by injecting $20 million into exploration, because the company understood better than anyone the geology of the region after its nearly four-year experience after drilling in the hard rock (at the bottom) and the eastern quarry (still in its in its infancy) to accelerate the exploration process until the feasibility study, retaining 60-65% AVZ and 35%-40% of the government. To date, it is objectively established that no other Cominière partnership has done explorations and field research such as AVZ at Dathcom and has submitted to the government a world-class Feasibility Study for the development of a Research Permit.
THERE WILL BE NO FOLLOW-UP TO THIS PROPOSAL.
DATHCOM MINING SA CLAIMS THE ENTIRE PERIMETER OF 221 MINING PLOTS BECAUSE IT IS A PROPER EXPROPRIATION.
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 challenging AVZ's right of pre-emption 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, enshrined in the country's mining legislation, has not been respected.
Beyond this aspect, the General Inspectorate of Finance (IGF) is involved in its investigation of this transaction.
The IGF's conclusions 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 responsibility of the Cominière management as well as that of the Ministry of the Portfolio are established, the irregularities found: encroachment on the prerogatives of the government's technical body in the choice of independent experts responsible for evaluating the 15% of the shares transferred, 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 the 15% of Cominière's shares in Dathcom. All this suggests the motivation of the sale: the quest for money by Cominière.
In accordance with Article 11 of the law on disengagement, the valuation of assets must be done 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 a state body.
In addition, and contrary to what Cominière says, 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 should be noted that we have here two Dathcom Mining partners who were not very effective in advancing the project during the exploration and research period before and after the arrival of AVZ in Dathcom. These partners became rather harmful and greedy for money from the publication of the feasibility study with the aim of harming AVZ by using state instruments, influence trafficking to win where they have not invested anything as is the case with Dathomir.
This kind of Machiavellian plan has been strengthened with the coalition of minority partners Dathomir Mining Resources, Cominière and the so-called newcomer - Zijin whose acts coordinated with AVZ and Dathcom say more: termination of the purchase contract by AVZ of Dathomir's shares, termination of the JV contract, report of the PR13359 partition, dissolution of Dathcom Mining, the recovery of all the squares of the PR13359 permit squares by Cominiere through the Kalemie court as recently registered in the Mining Cadastre, etc. And more recently, the allocation of the northern part of Dathcom Mining's Research Permit as PR15775 to Manono Lithium SAS, a new joint venture created between Jinxiang Lithium Limited ('Jinxiang Lithium'', a 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 regardless of the means used, while the southern part (96 mining squares) is the subject of a notice of force majeure.
Everything is totally illegal. Thus, AVZ, GREEN LITHIUM and DATHCOM jointly appealed to the Paris Commercial Court and the International Centre for the Settlement of Investment Disputes for the settlement of all these disputes in compliance with the Mining Code regarding arbitration. However, AVZ, Dathcom and GREEN LITHIUM remain willing and in good faith to 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 country while the country's copper and cobalt sector widely used and sought after by the whole world in the development of green energy is dominated by Chinese, including Zijin with a sulphurous reputation if we consider civil society relations and arm wrestling with Gécamines?
Coherent mining policy requires a diversification of actors taking into account geostrategic balances without ignoring the trade and technological struggles between China and the West. The mining economy of the DRC must stop being dangerously dependent on China.
Having detected and understood the Machiavellian plan put in place to dislodge AVZ, the latter favored a double approach: negotiate at home (in the DRC) and go to court outside. Obviously, the first step in the approach to a sustainable 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 ways:
- Presentation of its motivation in 2019 for the Manono Economic Zone to strengthen the value chain for the manufacture of precursors used in electric vehicle batteries;
- Suggestion of the development of an Industrial Code;
- Signing of the memorandum of understanding with the Ministry of Industry in February 2020;
- Held several workshops with the government's multisectoral actors in order to sign a development agreement including a Manono Economic Zone of which the Head of State, His Excellency Félix-Antoine Tshisekedi Tshilombo, spoke during his speech on February 05 at the International Mining Indaba Mining Forum 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. The two documents were sent to the Government Secretariat in August 2021, which sent them back to the Department 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 note AVZ's financial capacity to finance the different aspects of the project from different financial institutions: mining (mine, processing), infrastructure (logistics, roads, electricity and water) and processing (Manono special economic zone).
AVZ and Dathcom are still waiting for the report of the said Commission but realize today that their critics were already at work without their knowledge and without respect for laws or business ethics.
3. MINISTRY OF ENERGY AND HYDRAULIC RESOURCES
AVZ worked with the Ministry of Energy and Hydraulic Resources to solve the energy issue in the Manono area.
Thus, in July 2019, there was a Deposit of AVZ POWER's expression of interest for the rehabilitation of Mpiana-Mwanga 1 and 2 hydroelectric power plants aged about 90 and about 70 years each, respectively.
According to the official documents of the General Secretariat for Energy available to the public, the two power plants in question are owned by the State and not assets or assets of Cominière.
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 is set up by the Ministry. The commission gave its favorable opinion to the ministry after two days of work. The Minister of Energy and Water Resources signed the favorable opinion in March 2022 and recommended that AVZ POWER take the next step, which is to obtain the concession. There was no other sequel. Everything has been blocked somewhere in the administration by political burdens to the detriment of the development of the country and communities.
Once again, AVZ's critics were at work without their knowledge. When AVZ and Dathcom favor law and business ethics, critics 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 the Portfolio to inform it of the express reason for the purchase of the 15% stake in Cominière, as the latter had expressed its wish to do so in order to be able to finance its own activities. The Australian group wanted to go directly to the supervisory or supervisory authority in order to move things forward.
Minister Clément Kuete's answer was simple and summarized as follows: wait for the reorganization of the Cominière Board of Directors and the results of the feasibility study to know the true value of the said shares. What AVZ accepted and found normal.
In July 2021, AVZ received a vague communication from Cominière indicating, without details on the offer as provided for by law and custom in this area, that ZIJIN wanted to buy 15% of its 25% stake in Dathcom Mining and that its Board of Directors and Dathcom's Extraordinary General Assembly agreed. AVZ reminded Cominière of her right of pre-emption and Minister Kuete's letter 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, Dathcom's Extraordinary General Assembly without AVZ to approve the transaction, ad hoc representative to chair the Extraordinary General Assembly, filing of the PV for amendment with RCCM at the Commercial Court in Lubumbashi, etc. Quite well in illegality and violation of the laws of the country without stirred anyone. Nothing can be explained legally if not politically.
Zijin's last communication on the agreement with Cominière concerning the Northern Part of the Dathcom Permit dated October 23, 2023 made in Hong Kong stems from the meeting held between the Minister of the Portfolio and Zijin already on 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 refund of $33.4 million. A ZIJIN offer document of October 21, 2022 sent to the Congolese side to resolve Dathcom's blocking by taking its northern part 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
The AVZ party believes in an amicable resolution of all disputes by considering justice that respects the fairness and rights of everyone 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 it is the country's reputation in terms of business climate and as a country of solution in terms of climate, will help to resolve this dispute fairly and sustainably by taking into account the unfortunate jurisprudence "First Quantum Minerals" under the regime of its predecessor and that of "Vedanta Limited" at Konkola Copper Mines in Chingola, Zambia where its counterpart Hakainde Hichilema has just resolved a dispute, opposing the Indo-British group against the Zambian State and his company ZCCM-IH (
Zambia Consolidated Copper Mines Investments Holdings Limited) - their Gécamines-, which had been before arbitration in London since 2019 under his predecessor Edgar Lungu.m
According to several sources, the U.S. Embassy in Kinshasa is closely following this file and informs all potential U.S. investors to wait for the result of the AVZ case before any planned investment in the face of any proposal made to them on the Dathcom Permit.
Everything suggests that irreparable damage is caused to the country as a destination for Western investments in the lithium sector because of the tuiarm between Cominière and AVZ.
The Congolese government and all state officials will have to 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 (AVZ's country of origin), 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.
To date, everyone will have lost nearly 2.5 years because of 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 who invest in exploration and research and discourage those who invest in the expropriation of studies and permits of others.
Ben Nkaya's Chronicle for FKF Softpress.
