A plot by a coalition of powerful Chinese battery manufacturers, to take control of the world’s biggest lithium mine, threatens to crash the share price of Australian miner AVZ Minerals, a mysterious short seller has said.
AVZ Minerals could lose control over the Manano lithium mine in the Democratic Republic of Congo (DRC) and be left with a minority 36 per cent stake in the resource, if a plot being led by Chinese businessman Simon Cong is successful, Boatman Capital Research has said in a new report.
The report comes in the midst of a battle for control over the DRC mine between AVZ Minerals and Chinese miner Zijin Mining, which has seen AVZ voluntarily suspend trading of its own shares on the Australian Stock Exchange.
In its new report, Boatman Capital Research argues that AVZ is “being deliberately squeezed out of the Manono project,” as it claims the plot could see AVZ’s stake drop to just 36 per cent.
The scheme could see Zijin Mining and Chinese lithium miner CATH Energy Technologies take a combined 39 per cent stake in the mine, after CATH struck a deal with AVZ to buy a 24 per cent stake in the Congolese mine for $240m.
The short selling group warned that “at best, AVZ faces months or years of legal fights to block Zijin Mining and to claim shares from Dathcom Mining Resources. At worst, AVZ will lose control of Manono and be left with just 36 per cent of the project.”
Deal or no deal?
The spat comes as AVZ claims that it currently owns a 75 per cent stake in Dathcom Mining – the local company that owns the rights to the Congolese resource – with the remaining 25 per cent held by DRC government backed company Cominiere.
The Australian firm says it upped its stake in the mine, from 60 per cent to 75 per cent, after buying a 15 per cent stake from Cominiere.
However, minutes from Cominiere’s annual general meeting (AGM) show the firm believes this deal did not go through.
Documents from DRC’s High Court also show the court refused to uphold AVZ’s bid to acquire the 15 per cent stake in December. The Australian firm has said the court ruling is not valid.
At the same time, new documents obtained by Boatman Capital Research show Chinese company Zijin Mining bought a 15 per cent stake in the Manano mine from Cominiere for $33.4m.
Boatman Capital Research warned that AVZ could also face a series of investor lawsuits over its failure to disclose information on the disputes to its shareholders.
The report comes after Global Witness published a report raising doubts over AVZ’s initial deal to buy into the Congo mine, over concerns the Australian firm may have acquired its stake through corruption involving former Congolese president Joseph Kabila.
Boatman Capital Research raised suspicions that AVZ worked with Kabila’s government to strip the former owner of the Manono mine of its license through “what may have been a corrupt deal”. AVZ denies any “inappropriate links” to Kabila or the DRC’s former regime.
Boatman said AVZ now may be victims of “poetic justice” as the “new DRC government” could now be plotting to strip the Australian firm of the license that may have in fact been stripped from someone else.
In a final message to AVZ, Boatman Capital Research said simply: “Live by the sword, die by the sword.”
AVZ has been approached for comment.