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As commodities trading giant Glencore seeks to expand in the fast-growing market, the company plans to increase its presence in the Democratic Republic of Congo to source metals crucial for electric vehicle batteries.
Glencore has struck a deal with Toronto-listed group Tantalex, which explores for lithium in the Democratic Republic of Congo, in its first investment in a lithium mine in the central African country.
Under the deal, London-listed Glencore will provide Tantalex with up to $55 million in three stages in return for six-and-a-half years to sell Manono tail gas from Tantalex to refiners, automakers and battery makers. Lithium rights for mining projects.
Much of the financing will fund about a third of the roughly $150 million in capital expenditures needed to extract so-called spodumene concentrates, which contain lithium, from the waste dumps of former tin mines. Tantalex said the first production volumes are targeted for 2025.
“This will be Glencore’s first lithium investment in the DRC. They will bring their experience to the country,” said Tantalex chairman Hadley Natus. “I don’t think people can turn a blind eye to the Democratic Republic of the Congo when it comes to battery metals.”
The Democratic Republic of Congo plays a vital role in Glencore’s procurement of copper and cobalt, but the Switzerland-based trader has a checkered history in Africa, including the Democratic Republic of the Congo. Glencore last year pleaded guilty to paying bribes to secure oil supply deals across the continent and paid $180 million to the Democratic Republic of Congo to cover claims stemming from alleged corruption. Switzerland and the Netherlands are investigating the company’s past activities in the Democratic Republic of Congo.
The company has been working on a strategy to complement its portfolio of metals critical to the energy transition by expanding its lithium trading account.
Glencore, already one of the world’s largest recyclers of used portable electronics, collecting raw materials including lithium to sell back to customers, aims to fund lithium mines to supplement its recycling business.
While the DRC project is small and produces enough lithium over its lifetime to power some 3.8 million electric vehicles, it could help build infrastructure such as roads for the development of another potential project in the neighboring Manono region , the project could be the largest undeveloped lithium deposit in Africa.
Glencore has signed a $400m financing deal with France’s Eramet for a lithium project in Argentina, making the DRC deal the second of its kind to be publicly confirmed by the Swiss trader .
Glencore’s senior management has made it clear that it does not intend to operate or acquire large quantities of lithium mines, preferring instead a traditional deal model that provides debt financing in exchange for material supplies.
Chief executive Gary Nagle has repeatedly played down the hype in the lithium market, arguing that because the commodity is widely available around the world, supply will be able to increase to meet demand.
To further its strategy, Glencore is interested in taking on some of the debt of Australian lithium miner Alita, which has fallen into administration, in exchange for its future lithium production.
The DRC deal is subject to the finalization of contracts by the two companies and the completion of outstanding due diligence by Glencore.
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