A carbonate plant onsite is a big ask for both projects, it may not end up being feasible and a downstream processing plant may need to be implemented somewhere more suitable i.e. on the way to/at the product destination where it makes more economical sense. Key risks being power & energy requirements, logistics and costs of bringing in reagents, as well as the availability of skilled labour.
Luckily for BGS, the company has plenty of advantages, for example:
The company will be able to economically produce and sell concentrate sub $300/t which compares well with Australian producers who are currently producing >$330/t.
Given the distance of AVZ's project to port being approximately 3 times the distance of BGS' project to port, I can't imagine AVZ producing concentrate for any less than $500/t. How many refuel and sleep stop off points would there need to be to manage that amount of distance and travel time?
As the MD of AVZ, Nigel Ferguson stated in his presentation at the 121 Mining conference:
"Umm, now with regard to further infrastructure, the travelling, or overland transport, at the moment, ahh the road from umm Manono back down to the Lakasi Kolwezi Lubambashi road is not in very good shape. We've um a joint venture partner who owns 10% of the project who is um, organised um the Chinese investment group ah under the belts and bridges scheme, they've just committed 300 million dollars to doing up the roads so we will have a brand new road in a few years time, tarmacked all the way from Manono back down to the Lakasi road"
http://webcasting.brrmedia.co.uk/broadcast/5a7300d8355d671b8a71630b
So AVZ has no reliable route to port at all for approx. 3 years until that road is finished. If the trucks struggle to bring drill rigs in, how on earth could they commence bringing in heavy mining/chemical processing equipment?
BGS however, has existing asphalt roads in good condition all the way from the project to two different port locations, with rail options for each - 1 needing repair, the other in good condition and currently being upgraded to handle 5 x its current capacity.
I've shared the specifics on power & energy requirements for a mine and carbonate plant previously, but you'd be kidding yourself if you think that the Mpiana Mwanga hydroelectric power station will come close to powering a decent sized mine + carbonate plant for AVZ. The plant was destroyed by Rwandan forces and is going to be refurbished at Dathomir's cost at some point. Given that the plant is located 90km away from AVZ's project, how much would the transmission lines (which have also been destroyed) cost to rebuild? I haven't even got to the ridiculous thermal energy requirements of a carbonate plant but surely you can see where I'm going with this... there is a reason Nemaska are building their carbonate plant in Shawinigan and not onsite in Whabouchi.
Another competitive advantage for BGS however, is that it has grid power running by the project which is fed by multiple hydroelectric power stations that are operational. If BGS is able to hook into this, operating costs should be slashed even further, considering that energy costs generally make up a large proportion of operating costs.
A carbonate plant won't save AVZ from its logistical woes because to produce 1 ton of carbonate, you would need to bring in at least 7 tons of reagents and fuel sources. Where is the saving in trucks?
You could perhaps argue that with a higher value product, the logistical costs attributed to it are a smaller proportion of the overall cost of production, plus you can now produce something that will actually turn a profit, but really, it will just be a smaller profit compared to more competitive players like BGS who don't have triple the freight costs munching up the profits. The Chinese, or any potential investor will be looking for the highest IRR, not simply the biggest resource.
Not sure why you say that a 50Mt resource wouldn't attract a carbonate plant? Tianqi's carbonate plant at Kwinana was first designed for 24ktpa LCE production. A 1Mtpa mine at Goulamina could easily produce enough concentrate to feed the annual requirements of a 24ktpa LCE plant. Given the recent announcement from BGS indicating that BGS' maiden reserve will be >40Mt, the current resource could feed a plant of that size for 40 years. This is ignoring blatant exploration upside given that BGS' resource will easily smash 100Mt from the known areas alone and more than justify a 4Mtpa plant (100ktpa LCE for 20 years minimum).
Why would a Chinese company bother fronting up the cash for all of these huge CAPEX requirements, and logistical nightmares, plus pay a premium on AVZ's $500M market cap, to only receive 60% of a project that has a 40% free carried interest from its JV partners when there are cheaper projects out there with much better infrastructure already in place? For example, BGS...
