KINSHASA, PARIS, BRUSSELS.
Le Soft International n°1550|MONDAY APRIL 11, 2022.
With the Manono project, Congo seduces the whole world with the quality of its lithium. The Congo hosts a certain number of metals essential to the energy transition and which arouse covetousness. While the country is already the world's main supplier of cobalt and one of the major players in the production of copper, it now aims to add the exploitation of lithium to its arc. With its immense reserves, the Manono project, province of Tanganyika, in northern Katanga, is ideally placed to help it achieve this objective and the conditions are in place to allow its development.
Analysts and observers are unanimous. The demand for lithium can only continue to grow in the short and medium term, which will support a rise in prices. Like nickel or cobalt, lithium is used in the production of lithium-ion batteries, which are essential for electric vehicles.
However, a BloombergNEF analysis published in mid-January 2021 predicted a 60% increase in sales of these cars and this increase should continue to progress over the next ten years, thanks in particular to incentive policies in most countries and to the announced end of the diesel engine.
At the same time, a report by the market research firm Market Research Future (MRF) and relayed on March 10, 2021 by GlobeNewswire, confirms the optimism about lithium.
According to the authors of the document, the global market for lithium-ion batteries (used in electric vehicles and certain electronic devices) will experience a compound annual growth rate of 15.90% until 2026.
It should be emphasized that all of these forecasts start from a simple observation: that governments, environmental organizations and international organizations are all campaigning for the reduction of the carbon footprint, in order to limit global warming.
This is why all projects that can promote the achievement of its objectives receive special attention, both from political decision-makers and investors.
THE MAJOR PROMISES OF THE MANONO PROJECT.
Until the interesting discoveries announced by AVZ Minerals, the Manono site was not known to harbor large lithium reserves. It has certainly already been the subject of mining between 1919 and 1982, and moreover continues to shelter small mining artisans, but it was then about the extraction of tin and tantalum.
The successive updates from the mining company, which currently owns the project at 75%, have therefore aroused surprise and growing enthusiasm on the part of investors and potential buyers of future lithium production.
Given the importance of metal, manufacturers of materials for electric batteries are scrambling to secure supplies very early, even for projects that are not yet in production. It must also be said that, in the case of Manono, they were encouraged by the data published by AVZ Minerals.
Thus, the definitive feasibility study published almost a year ago, in April 2020, estimated the life of the mine at 20 years. This forecast is based on the mineral resources of Manono, which is considered the largest hard rock lithium deposit in the world.
It hosts 44.6 million tonnes of “proven” reserves and 48.5 million “probable” reserves. Over the twenty-year lifespan, the mine should have an annual production capacity of 700,000 tonnes of spodumene concentrate (SC6), a raw material needed for the production of lithium hydroxide and carbonate. Manono should also deliver 45,375 tonnes of primary lithium sulphates each year.
In addition, the project is also attractive on the financial aspect. In addition to an annual EBITDA of US$380 million over the life of mine, the project would, according to the DFS, have an internal rate of return of 33% and an after-tax net present value of US$1.03 billion. .
This last point should even see a significant improvement due to the constant progress recorded by the lithium market in recent months. To realize the potential of the project, an investment of US$545.5 million will be required, recoverable after 2.25 years. These estimates are already very promising and have been rather well received on the market, as evidenced by the rise of more than 200% of the title of AVZ on the ASX stock exchange in Australia.
WORLD CLASS LITHIUM QUALITY.
Over the course of studies demonstrating the capabilities of the Manono project, producers of materials for electric batteries are pointing the tip of their noses. Just months after the feasibility study, AVZ Minerals received its 2021 Christmas present in the form of Manono's first-ever lithium offtake agreement.
Announced on December 24, the partnership negotiated with Ganfeng Lithium, one of the largest Chinese producers of materials for electric batteries, will span an initial period of five years, which may be extended thereafter.
Under the terms of the contract, AVZ must supply annually up to 160,000 tonnes of spodumene concentrate (SC6).
"The fact that we have signed our first offtake agreement with China's largest producer of lithium compounds only reinforces our belief that the Manono project is world-class," commented Nigel Ferguson, CEO of the company.
To confirm its hopes, the company sought the support of the Canadian laboratory Kingston Process Metallurgy. The results of the tests announced in January 2021 thus revealed that the spodumene extracted from Congo can be perfectly used in the production of electric batteries. The primary sulphate obtained after purification contains more than 80% pure lithium, which is the ideal raw material for the production of lithium-ion batteries. This good news may have increased buyer interest, as less than two months later, AVZ Minerals confirmed that it had already found buyers for over 50% of the marketable SC6 production at Manono.
The company has entered into a new supply agreement with another Chinese partner, Shenzhen Chengxin Lithium, one of the world's leading producers of lithium hydroxide and carbonate.
The latter has undertaken to purchase annually up to 180,000 tonnes of SC6 concentrate. The agreement covers an initial period of three years, but may be extended by prior agreement of the parties.
Over the past few months, AVZ Minerals has made significant progress in the development of the Manono project. Alongside the off-take agreements, the company is for example studying ways to reduce the carbon footprint of its future activities on the site.
She asked for an independent assessment, whose recently revealed findings showed that the mine may be one of the cleanest in the world. The company intends to rehabilitate the Mpiana-Mwanga hydroelectric power plant, which will reduce greenhouse gas emissions. This plant should have a capacity of 54 MW in the long term, making it possible to achieve 90% savings on energy expenditure.
Added to this is the acquisition of an electric vehicle fleet, which will limit diesel consumption. While the various engineering works are progressing, all that remains is to complete the financing in order to start the construction work. The entry into production will increase Congo's influence in the strategic metals sector and generate millions of dollars in revenue for the public coffers.
Emiliano Tossou.
