As lithium supply is expected to run into a deficit over the next few years due to increased demand from the booming electric vehicle sector, where lithium-ion batteries dominate, ASX-listed lithium developer AVZ Minerals is well placed to meet this growing demand for lithium-grade batteries through the development of its Manono lithium and tin project in the Democratic Republic of Congo (DRC).
CHANTELLE KOTZE talk to MD NIGEL FERGUSON on the critical path to construction.
Demand for spodumene concentrate – a feedstock used in the production of lithium chemicals that go into electric vehicle (EV) batteries – improved significantly in the last quarter of 2020. This trend has led to higher prices. of lithium over the same time frame and is an early indicator that lithium prices are expected to continue to rise exponentially due to tighter supply from around 2023/24 as the market goes into deficit. In this regard, some analysts forecast deficits of around 1 Mtpa over the next decade.
THIS ARTICLE FIRST APPEARED IN AFRICA MINING REVIEW NUMBER 3, 2021
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Despite the slow manufacturing and sale of electric vehicles during the COVID-19 pandemic, there has been a remarkable resurgence in sales of electric vehicles in the last quarter of 2020, led by Europe and China, which is boosting the demand for metals for batteries.
AVZ documentation for the Manono mining permit under study
DRC approves draft agreement with AVZ Minerals
AVZ signs binding SC6 direct debit agreement with lithium converter
This positive development in demand, which has resulted in higher prices for lithium spodumene concentrate, lithium carbonate and lithium hydroxide, could see AVZ increase the proposed scale of the Manono project from 4.5. Mtpa proposed in the DFS, Ferguson said.
The rise to construction
After completing a scoping study of 2 Mtpa and 5 Mtpa in May 2019, followed by a definitive feasibility study (DFS) in April 2020, which not only proved that the project would be economically viable, but very robust with measures strong financials, the company is in the process of completing an optimized DFS to understand how to best develop the Manono asset.
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The optimized DFS will include the results of the Front End Engineering Design Study (FEED) that was awarded to Melbourne-based engineering company Mincore in February of this year. The FEED study, which will confirm the process diagram, confirm all quantities of bulk materials to verify prices, confirm the prices of the selected equipment, finalize the execution schedule and provide the first work plans, allow a Cost assessment and much tighter development plans for the project as it progresses, Ferguson says.
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In addition to this, the optimized DFS will take into account the recently completed 1,650m of diamond drilling in the bottom âcornerâ of the Roche Dure pit – previously inaccessible and underwater in previous resource drilling programs. The objective of this drilling campaign is to upgrade the estimated ~ 11 Mt of âwedgeâ material currently classified as inferred to indicated resources for conversion to probable mineable reserves.
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“Previously classified as waste, the ‘wedge’ material should now be classified as mineable ore and will lead to a potential reduction in the ore / waste stripping ratio as well as a potential increase in income, an increase in mine life, increase the volume of the surface mine, increase the mine life, reduce operating costs and reduce the payback period, âsays Ferguson.
The company is in the process of assembling this new data and will rerun the models to calculate both new geological resources and then upgraded mineable ore reserves to power the optimized DFS, which is expected to be released in June / July this year. .
Ferguson explains that the next and final steps in the project include the eighth and final Environmental and Social Impact Assessment (ESIA) application to be submitted for approval, the submission of a mining license application to Mining Cadastre, or CAMI, in the DRC and making a final investment decision and advancing the EPC award of the processing plant and hydropower plant in the second quarter of 2021.
At the height of Manono
DFS 2020 indicated that Manono could produce a blend of 700,000 tpa of lithium spodumene concentrate, or SC6 concentrate (containing 6% lithium) and 45,000 tpa of high value primary lithium sulfate, or PLS (containing 80% lithium). lithium) over a 20-year lifespan, based on an operation of 4.5 Mtpa.
The addition of the PLS product will see 153,000 tpa of the 700,000 tpa of SC6 concentrate used as the feedstock to produce the 45,000 tpa of PLS.
Further upward processing would potentially be developed in two stages – the first stage, as expected, involving recovery by dense media separation (DMS) producing SC6 concentrate, with an additional calcination circuit to produce lithium sulfate and the second step combining an additional treatment by adding a carbonate or hydroxide circuit, to produce lithium carbonate or hydroxide. The company’s goal is to increase production of PLS ââby converting additional amounts of SC6 product as the project progresses.
In addition, the processing scheme also recovers approximately 828 tpa of tin as well as additional tantalum and niobium from hard rock ore, as well as an additional estimate of 600 tpa of alluvial tin and tantalum, which will be protected from alluvium and residues. sources.
The sample takes off
AVZ Minerals has already secured binding offtake agreements for more than 80% of the expected annual commercial proceeds from Manono’s SC6. In December 2020, the company signed a drawdown agreement with China’s largest producer of lithium compounds, Ganfeng Lithium, for 160,000 tpa of SC6 for an initial term of five years and with a five-year extension option.
In March 2021, it signed its second and third SC6 direct debit agreements. The second offtake agreement was signed with global battery materials producer Shenzhen Chengxin Lithium Group for 180,000 tpa of SC6, for an initial term of three years and the third was signed with lithium-ion battery maker Yibin Tianyi for 200,000 tpa of SC6 for an initial term of three years, with an option to extend for another two years.
Also in March, AVZ successfully concluded its first tin extraction agreement with commodity trader Kalon Resources – a wholly-owned subsidiary of Noble Group – for 600 tpa of tin concentrate for three years – equivalent to to about 43% of the total tin concentrate available for sale.
âOther groups are currently in procurement negotiations with us for the remainder of Manono’s planned production of SC6. At the close of these drawdowns, we expect to be oversold on our available SC6 production, âFerguson enthuses.
Meanwhile, in terms of PLS ââdirect debits, there are currently four groups interested in signing direct debit agreements for the product. The groups demanded lab-scale test results, which AVZ delivered, proving it is capable of producing PLS with a minimum of 76% lithium. Other lab-scale test work has proven that PLS with over 80% lithium can also be easily produced.
The lithium and tin drawdown agreements will help the company meet certain preconditions that are required of potential investors in the company – the last step in ensuring Manono begins construction before the end of the year.
âNow that we have received binding off-take agreements for 80% of our proceeds and once we have our mining license in hand, seven of the eight development finance institutes with which we have signed non-binding letters of intent will renew. with us. on the financing agreement. Among them, they have pledged to fund between $ 430 million and $ 450 million of the required $ 545 million that we need.
âWe are engaging with potential Chinese and European funders for the equity portion of the funding, which we hope to finalize in the second half of the year,â Ferguson said.
On the road to green
Since lithium (among other battery metals such as tin, cobalt, copper, nickel and graphite) is at the center of the transition to clean energy and transportation, lithium producers are increasingly required to ensure that their carbon footprint is kept to a minimum and that their projects are as carbon neutral as possible. The goal is not to exacerbate carbon emissions and risk climate change that the extraction of their raw materials tries to mitigate.
As a result, Manono will be primarily powered from green energy sources, including hydropower from the Mpiana-Mwanga hydropower plant, which, when renovated, is expected to meet all the electricity needs of the Manono project. The company is also investigating the potential use of solar power and battery energy storage in the future if the operation requires additional electricity.
In addition, AVZ is studying and planning substantial greenhouse gas mitigation measures, which include the purchase of an electric mining fleet once commercially viable equipment becomes available; the production of hydrogen from excess renewable electricity to enable the use of fuel cell electric vehicles; and the establishment of a 5,000 ha sequestration plantation.
The company is also considering recovering energy from the steam produced at its proposed sulfuric acid plant using a steam turbine as an additional form of green energy if it goes ahead with the establishment of an on-site sulfuric acid plant (currently under study).
The company, which strives to be as close as possible to a âzero emissionâ operation, has carried out an independent greenhouse gas study, the results of which showed Manono to be in the lowest quartile. low lithium mines – about 30-40% less. than all other hard rock lithium miners.