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Amid pandemics, security instability

and political change across the continent,

Australian miners, developers and explorers

in Africa have made major strides this year.

he main headlines will go to the producers with companies addition route. The likes of Peak, AVZ and EcoGraf Ltd are as-
Tsuch as West African Resources Ltd, Perseus Mining Ltd sessing downstream processing options for their product to
and Base Resources Ltd posting strong production and financial open up possibilities in what can be a complicated and opaque
numbers for the first six months of 2021. Even Resolute Mining global supply chain.
Ltd – plagued by problems at its Syama gold mine in Mali – has Many African governments have long-held value-addition
rebounded in the last four months, its share price climbing 50% ambitions and with international customers and governments
since April. also showing preference for vertically integrated supply chains,
The latest arrival to the producer club is Firefinch Ltd, the fo- pressure on miners to move beyond concentrate production is
cus of our cover story this month. Its share price has doubled increasing.
since the turn of the year on the back of its successful restart of Downstream processing obviously comes with additional
operations at the Morila mine it acquired last year and the farm- capital and infrastructure requirements, bringing these projects
out of its Goulamina lithium project to China’s largest lithium pro- closer to iron ore developments again.
ducer Ganfeng Lithium Co. Ltd. There are still differences though, the most discernible being
Firefinch straddles the two main trends in African mining cir- around financing.
cles. In iron ore, there is only ever one source of finance and one
Gold remains the continent’s most important mined commod- customer, China Inc. The western majors such as Rio Tinto Ltd
ity. The economics, capital intensity and infrastructure require- and BHP Ltd have shown little inclination to help juniors estab-
ments of gold developments mean their short payback periods lish themselves in Western Australia’s Pilbara region, never
are more palatable to financiers who want to ensure their returns mind on another continent.
in what are still perceived to be high and medium risk jurisdic- Even Fortescue Metals Group Ltd – currently investing in a
tions. myriad of projects across Africa and Latin America – has steered
The last two years though, have seen a noticeable shift to- clear of iron ore assets in its globalisation strategy.
wards investment in battery minerals projects. This trend is not Western financiers are equally reticent to commit funding to
restricted to Africa but there are specific opportunities – as well multibillion dollar projects which require years of complicated in-
as challenges – facing lithium, graphite, nickel, rare earths and frastructure construction in higher risk jurisdictions, only to see
cobalt developers on the continent. them still struggle to compete on the cost curve against the low-
This edition features companies such as AVZ Minerals Ltd cost Pilbara giants.
(lithium), BlackEarth Minerals Ltd (graphite), Black Rock Mining Even with the increased capital intensity of downstream pro-
Ltd (graphite), Peak Resources Ltd (rare earths) and Walkabout cessing, battery minerals projects already appear eminently
Resources Ltd (graphite), all of who are closing in on either con- more fundable than their iron ore equivalent.
struction or final development decisions on their projects. Where iron ore companies are restricted in their funding op-
The question remains, can these Australian companies suc- tions, lithium, graphite, rare earths and nickel, companies are
cessfully deliver operations? finding their horizons ever increasing. Western economies are
The last time we saw an ASX-led investment boom on the concerned by China’s dominance of clean energy metal supply
continent outside of gold was 12-13 years ago when more than chains and both governments and large end-users such as car-
half a dozen iron ore hopefuls sprung up across the continent. makers are actively assessing ways they can secure supply of
As you will see from our coverage of the last remaining com- key minerals all the way back to the mine gate.
panies on page 54, this boom did not end in success with Gi- This is already translating to on-the-ground investment in Af-
ulio Casello – chief executive of notable explorer Sundance rican mining projects. Peak is a prime example. It plans to mine
Resources Ltd – stepping down from his post as the company and mill its ore from its Ngualla rare earths project in Tanzania
becomes further entangled in court battles over the expropria- before shipping concentrate to the UK for refining. It is receiv-
tion of assets. ing widespread UK Government support for its plans and is at-
So, will the battery minerals companies emulate their gold tracting interest from export credit agencies across the western
peers or their iron ore predecessors? world.
The outlook is hopeful. Battery minerals projects share some It is a model which is repeatable across the African continent
economic similarities to gold with their relatively high values, and one that may ensure battery minerals projects do not fall by
meaning they require less infrastructure to transport and export the wayside like the iron ore assets of a decade ago.
product and therefore come with smaller price tags than bulk
commodities such as iron ore.
However, mining is only part of the story. An increasing num-
ber of battery minerals companies are heading down the value dominic@paydirt.com.au @DominicPiper

Page 4 aUgUST 2021 aUSTRaLIa’S PaYDIRT