A battle for control of a vast, untapped lithium deposit has intensified as AVZ Minerals’ major shareholders indicate support for the board’s removal.
The Manono project in the Democratic Republic of Congo holds substantial potential as a major lithium source for batteries.
However, AVZ, the Australian miner, has faced legal battles and disputes with partners and the Congolese government since obtaining exploration rights seven years ago.
This conflict arises amid rising competition to exploit lithium reserves, primarily due to increasing electric vehicle demand, despite this year’s price decline triggered by oversupply.
Yibin Tianyi Lithium Industry Co., a Chinese EV battery chemicals producer, expressed disappointment with the current board’s performance and plans to vote for their removal.
The company believes the Manono project has missed crucial development opportunities.
Zhejiang Huayou Cobalt Co., AVZ’s second-largest shareholder, is also supporting the ousting of directors, facilitated by a group called Make Manono Great Again (MMGA).
Although AVZ and Huayou Cobalt declined to comment, Yibin Tianyi and affiliates own approximately 7% of AVZ shares, with Huayou Cobalt holding about 6%. In contrast, the MMGA group holds only 0.14%.
AVZ’s market capitalization was A$2.75 billion before trading halted in May 2022 while awaiting Congo’s conversion of an exploration permit into a mining license.
However, the Congolese authorities withdrew the permit earlier this year due to shareholder conflicts, subsequently splitting the exploration area between Zijin Mining Group Ltd., Cominiere (Congo’s state-owned entity), and AVZ.
AVZ, led by Managing Director Nigel Ferguson, contests the legality of this decision. The International Chamber of Commerce ordered Cominiere to halt development activities in response to AVZ’s complaint.
MMGA vows to resolve legal matters promptly, negotiate with stakeholders and the government, and expedite project development if they assume control.
The fate of AVZ’s leadership, particularly Ferguson and co-directors, rests with Australian retail and institutional investors.
MMGA alleges that the current leadership’s actions have brought the Manono project to a standstill, risking the loss of the entire asset.
Michael Carrick, a candidate on MMGA’s board ticket, highlighted the company’s entanglement in litigation and the government’s apparent rejection of AVZ’s board.
