AVZ moves step closer to great escape from the DRC

A ceasefire in a legal fight has set the scene for AVZ Minerals and a US company backed by Bill Gates and Jeff Bezos to finalise the sale of a major DRC lithium project.

The disputed AVZ Minerals lithium project in the DRC.

Perth-based AVZ Minerals and the Democratic Republic of Congo have suspended their bitter legal battle over a giant lithium project as the US closes in on a critical minerals pact with the troubled African nation.

The US pushed AVZ and the DRC to find common ground as part of its desire for the lithium prize to end up in the hands of an American company – and not in the clutches of Chinese interests.

The suspension of legal hostilities takes AVZ a big step closer to having its permits over the southern portion of the Manono Project returned so it can be on-sold to California-based KoBold, a company whose backers include Bill Gates and Jeff Bezos.

AVZ and the DRC’s state-owned mining company hit pause on legal action in the International Court of Arbitration of the International Chamber of Commerce until June 23 in a sign of goodwill, and will negotiate on the return of the Manono permit.

The prospect of a peace deal sometime in the next four weeks also suggests a timeline for a deal between AVZ and KoBold, who are in negotiations about the sale price.

The market valued AVZ as high as $4.6bn in 2022 amid a lithium boom and excitement around Manono that drew in more than 21,000 investors.

The company’s stocks tumbled and it was eventually de-listed and hit with disputed corruption allegations after losing control of the massive hard rock deposit that has been likened to the world-leading Greenbushes lithium mine in Western Australia.

The disputed AVZ Minerals lithium project in the DRC.

Investors now appear well on track to receive some return based on the thaw in relations between AVZ and DRC officials, and lobbying that garnered US support for Nigel Ferguson-led AVZ.

The Australian first reported in March that the Trump administration was poised to insist control of the southern part of Manono be handed back to AVZ, in a move that risked provoking a backlash from China.

The Trump administration and the DRC are now close to signing a critical minerals pact after DRC President Felix Tshisekedi sought US protection from Rwanda-backed M23 rebels that had overrun parts of his country.

The US State Department published a declaration of principles between DRC and Rwanda that provides a framework for peace, and AVZ and KoBold confirmed they were working a deal on Manono since The Australian’s exclusive report.

The United Nations estimates more than 71,000 people fleeing violence in the east of the DRC have crossed the border into Burundi since January.

The US wants AVZ and the DRC to drop any legal action before a sale, with the ceasefire in their arbitration case pointing to a breakthrough on that front. It appears Chinese mining heavyweight Zijin will be left alone to develop the northern half of Manono.

However, AVZ will have to talk with Chinese battery-maker CATL, which listed on the Hong Kong Stock Exchange last week, about the sale to KoBold. A CATL subsidiary owns part of AVZ and, through a deal revised in January, helped fund the legal fight with the DRC.

It was reported on March 30 that AVZ could on-sell the Manono project to KoBold for up to $US1.5bn.

However, the sale price remains unclear and complicated by geopolitics, further weakness in global lithium markets and the possibility the DRC could ignore any adverse ruling if the international arbitration case were to continue.

Originally published as AVZ moves step closer to great escape from the DRC