The Democratic Republic of the Congo (DRC) is known throughout the mining industry for being very rich in resources, yet also bears a reputation for corruption and poverty that suggests too little of the money made from resource extraction finds its way to the average citizen. It is an age-old story in many industries and countries around the world, but the DRC in particular seems known for it.
In this light, it is always interesting to speak with someone who operates in a distant environment such as the DRC and hear what they experience directly – what their reality is on a day-to-day basis.
Tantalex Lithium Resources (CSE:TTX, OTC:TTLXF) CEO Eric Allard has been working in the DRC for years, and while readily acknowledging the challenges facing the general population, suggests that conditions can vary dramatically by location.
The Manono area where Tantalex’s three projects are to be found seems an attractive jurisdiction in which to work, with good potential for local residents to benefit from their natural surroundings.
And with lithium, tantalum and tin all in the mix, Tantalex’s is a set of projects and minerals well suited to the times.
Allard spoke with Proactive in late October about conditions in the DRC and the Tantalex experience there as the company moves two projects toward production and plans for exploration on a third.
Subsequent to the discussion, Tantalex announced it had concluded a marketing offtake agreement with commodities giant Glencore for 100% of the lithium from the Manono lithium tailings project, a convertible secured financing facility, and financing of one-third of the required CAPEX, a term sheet for which had been announced in September.
Proactive: There has been quite a bit of news out of the DRC in the past few weeks, some of it important for the lithium industry and some of it separate and distressing from a humanitarian perspective. You are in the country often to oversee Tantalex’s projects. What are conditions like on the ground near your projects and what can you tell us in general about conditions in the DRC in 2023?
Allard: I have been going to Manono since 2016 and have spent a lot of time there. We have a team of over 200 people on the ground and are building and developing multiple projects in the area.
Our approach is to be fully integrated with the community in Manono. We do not operate out of a separate mining camp or try to separate ourselves from the community. We interact on a daily basis with the people who live in Manono and call it home.
Now, the situation from economic, medical and livelihood perspectives is undeniably difficult. There is subsistence farming and most people live by conducting artisanal mining. There is little in the way of access roads, so it is difficult for the population in general to get in and out. There is an airport, but the costs are prohibitive for many people.
One thing I must say about Manono is that it is peaceful. The people are very generous and helpful, and there is no armed conflict such as what you see in the eastern Kivu area near the border with Rwanda. We are far away from that area and the situation in Manono is more one of economic poverty and lack of access to medical and educational facilities.
For the DRC in general, I think the country and its new president are reaffirming the position of the DRC as a powerhouse – as a country that is allowed to protect its borders and not be the victim of organized corruption. It is very geopolitical, of course. The border is now closed between the DRC and Rwanda. The DRC is rich in mineral resources and they have been bringing up a lot over the last few years and it is their right to benefit from those economics.
News just came out that Zijin Mining of China is forming an entity with a DRC state-owned company to develop a new permit area in Manono township and move forward with development of a lithium property. It is disputed by AVZ Minerals out of Australia but, regardless, would seem to be a sign that the goods are there. How do you read this?
For us, the more investment there can be in the area the better. Whether it be from the East or the West, it really doesn’t matter as long as it is done with respect for the local people and environment. We need to see more infrastructure and investment in the community and the creation of employment to create a sustainable economy.
As you note, Zijin Mining just announced they have reached an agreement for the Manono lithium joint venture concession. They are really our neighbor – they are just a few kilometers away from our tin project. We see that positively as they will create infrastructure and bring hydroelectricity to the area, and export roads and investment in the community. If Zijin can accomplish a similar project in Manono as what they have for the Kamoa-Kakula copper mine in Kolwezi with their joint venture partner Ivanhoe, then Manono will certainly benefit tremendously.
We stay away from any kind of dispute that has been arising from the ownership of the previous concession and our goal looking forward is simply to develop our projects alongside the communities in Manono as soon as possible.
With CATL as partner into the southern concession and Zijin now holding the majority of the northern concession of the historical mine, it’s likely shaping up to be two different operating mines to exploit the vast hard rock resources of Manono.
It is by far the largest undeveloped hard rock lithium resource in the world and deserves to get a lot more positive attention. We are right alongside these two concessions with our lithium tailings project and with our Pegmatite Corridor project we also possess vast unexplored concessions immediately downstrike from the old historical mine.
We will be producing 112,000 tons of spodumene concentrate per year at our Manono lithium tailings project, and they will likely be producing a lot more, each of them. And that is fine. It’s going to be excellent for our economics if we pay less per ton for export and for energy.
There is also support from the US for battery metals projects in the DRC. What can you tell us about that?
They are very interested in the critical minerals space. We have had discussions and still are. They are looking into the area as much as they can. I don’t know of investment into any producing mines at this stage, but I think they have organized themselves to do so and I believe they have quite a budget for this going forward. So, it is definitely something we will be looking into as we progress with our feasibility study and look at our CAPEX financing options. Glencore has already committed to finance one-third of our CAPEX so we now need to close on the other two-thirds over the next months.
How about the lithium market itself? Prices have cooled but the supply-demand outlook remains very encouraging.
I think what is really affecting the market at the moment is the downturn in the Chinese economy. And the fact that as the Western world is rolling out and getting ready for the EV boom, there are still not that many cars being produced. So, I believe the lithium price downturn was predictable given the huge spike that happened last year. Right now, pricing is still very favorable for lithium producers and there is no doubt that the lithium demand will only increase enormously over the next few years.
Since we last spoke, Tantalex announced commissioning of the TiTan tin and tantalum plant and also released an impressive Preliminary Economic Assessment (PEA) for the Manono project. Both are good signs of progress for Tantalex and for economic activity in the DRC.
Commissioning is ongoing. There are a few minor administrative procedures that we need to do before we are able to export our first tons, and we hope to make an announcement before too long. There are a few technical adjustments we will be doing to our front end to increase our production to the nominal capacity we designed it for.
Overall, things are progressing extremely well. The community is really behind us and everyone is working hard. We are still employing 150 people and mining has progressed quite a lot, with 100,000 tons on the ROM (run of mine) pads already.
So, we are looking forward to announcing our first export and optimal production, which should be within weeks.
On the Manono lithium tailings, our PEA came out and the IRR (Internal Rate of Return) was impressive and at a low CAPEX to be producing 112,000 tons per year. Our OPEX is also very good, and there is the promise of lower energy and export costs as well.
Keep in mind that energy costs represent 42% of our OPEX, and our export cost was close to $300 per ton, so going forward this is really going to be an area of major cost savings for our project.
Any closing thoughts on working in the DRC? Some of the news coming out of the country on natural resource development brings conditions into question, but your experience is, overall, quite positive, both on the business front and your interaction with the community.
I’d like to say the DRC is really proactive in creating this battery metals industry. I was just recently at the DRC-Africa Battery Metals Forum in Kinshasa, where we presented our project and explained to the sector how lithium was also coming to complement the production of copper and cobalt. Let’s not forget that they are the biggest producer of cobalt in the world, and now the second-biggest producer of copper.
So, the DRC is a heavyweight to contend with. The grades typically in the DRC for all these resources are just amazing. And as we overcome some of these challenges of starting up, and once we get our foot into the DRC and understand how the country works, working in the DRC is actually going well for us. Patience and perseverance are key factors for settling in and once we have demonstrated to the people and the government that we are serious developers and are there to build and to stay, then the dynamics really change.
We have made a lot of progress. We’ve converted from research permits to mining concessions. We are really active on the ESG side as well, and in supporting development in local communities. The government really does recognize these efforts to support the local populations. Overall, I can say it is a pleasure to work with the people in the DRC.