Manono, based in Congo, is the world's largest lithium mine, which has always been controlled by Australia's AVZ Mining Limited.
However, overnight, Australia's AVZ Mining suddenly found that it may have lost a controlling stake in the mine, and thus was controlled by a Chinese company, which triggered a lithium mine battle between Chinese and Australian companies.
background
The Manono Lithium/Tin Project is an important mining project in Congo, currently the largest lithium mine in the world, and a joint venture, Dathcom Mining SA, owns 100% of the Manono Lithium/Tin Project.
Australian mining giant AVZ claims to own 75 percent of the joint venture, with the remaining 25 percent owned by La Congolaise D'Exploitation Miniere SA (Cominiere), partly in the interests of the Congolese government.
In this way, Australia's AVZ owns 75% of the world's largest lithium mining project. In a controlling position.
What does Australia's AVZ Mining want to do with this mine? Of course it's to sell it to make money! China is the largest market for electric vehicles, and with regard to the current tensions between Australia and China, AVZ feels the need to bring in a Chinese company.
Well, that's it.
Therefore, on September 27, 2021, AVZ introduced Suzhou CATH as a cornerstone investor to fund manono's development and purchase lithium for future production. CATH is a private investment entity jointly held by Pei Zhenhua, the actual controller of Tianhua Ultra Net, and CATL.
In return for capital and acquisitions, CATH will acquire a 24% stake from AVZ, which retains a 51% controlling interest.
Perfect! In doing so, AVZ gained investment and opened up a sales market, while retaining a controlling stake in itself.
This is the background.
The equity war begins
Just when Australia's AVZ Mining was happy, suddenly a Chinese company came in, Zijin Mining. Turn the plans of AVZ Australia upside down.
Just on May 11, Zijin Mining, one of China's largest miners, abruptly declared that it owned a 15 percent "legitimate" stake in the joint venture, Dathcom Mining SA. (Dathcom Mining SA owns 100% stake in The Manono Lithium Mine)
Where did Zijin Mining's stake come from, and it was Coniere who sold it to Zijin Mining. Boatman, a London-based short-selling agency, presented a contract showing that Citigold Mining, a subsidiary of Zijin Mining, agreed to buy a stake in Communicate for $33.4 million.
Here's the problem!
If, according to AVZ, avz owns 75 percent of the joint venture, with the remaining 25 percent owned by Comice, it would be useless even if Zijin Mining bought a 15 percent stake in Comice.
This is where 75% of AVZ's stake came about, and 15% of AVZ's 75% stake came to be in September 2020, when another company called Dathomir Mining Company came about.
However, Zijin Mining said that AVZ's purchase of Dathomir's stake was unsuccessful because the Congolese court terminated the transfer of a 15% stake from Dathomir to AVZ.
Zijin Mining believes that the shareholding structure is that AVZ owns 60% of the joint venture, Cominiere owns 25% and Dathomir Mining Resources (Dathomir) owns 15%.
Then, look at the statement on the Zijin Mining website:
After negotiations between July 2021 and September 2021, Cominiere agreed to transfer a 15% stake in Dathcom to Jincheng Mining, a subsidiary of Zijin Mining, and signed the transfer agreement. ”
In other words, the 15% stake bought by Zijin Mining is not 25% of TheCominiere itself (the interests of the Congolese government remain unchanged), but the Congo has sold 15% of the DATHcom that AVZ already has in hand to Zijin Mining.
As a result, as London short selling agency Boatman said in a research note on Friday, AVZ's stake in the Manono lithium project in the Democratic Republic of the Congo could fall from 75% to 36%, which is the worst-case scenario for AVZ in Australia, while the best-case scenario for China is that the two Chinese companies can eventually own 51% of the shares and complete the holding. (The follow-up is unclear, awaiting follow-up operations.) ）
Faced with such a situation, Australian AVZ Mining will certainly not do it.
AVZ said Zijin Mining's agreement with Cominiere was "worthless" because the company had priority in buying Cominiere's shares. Cominiere currently holds a 25% stake in the project. AVZ said it was in "in-depth discussions" with the Congolese government to acquire a 15 percent stake on its own.
AVZ has begun legal proceedings against Zijin Mining, which is likely to continue for some time. AVZ's Australian-listed shares have also been suspended, and there is still an aftermath of the equity war over the world's largest lithium mine.
However, the position of the Congolese government and the courts in favor of Chinese companies is very clear.
London short selling agency Boatman short-selling Australia AVZ is a basic operation, and the action behind it is also intriguing.
Congo is an important source of materials for the transition to clean energy. China is the world's largest producer of cobalt and has a large deposit of lithium, both of which are key components of electric vehicle batteries. Chinese companies have taken aggressive action to secure supplies from the Central African country, which now controls about half of Congo's cobalt production and about 70 percent of its copper production.
In China, the world's largest electric vehicle market, lithium prices have risen more than 400% in the past year.