AVZ Minerals inks third spodumene offtake deal for Manono lithium and tin project

AVZ Minerals (ASX: AVZ) has inked a third binding offtake deal for spodumene concentrate from its flagship Manono lithium and tin project in the Democratic Republic of Congo – this time with China’s Yibin Tianyi Lithium Industry Co.

Under an initial three-year agreement, the major Chinese lithium converter will purchase up to 200,000 tonnes per annum following the start of production from the project. The deal also includes an option to extend for an additional two years.

This is the third spodumene offtake deal AVZ has secured for the project, following a five-year 160,000tpa agreement with Ganfeng Lithium executed late last year and a three-year 180,000tpa deal signed with Shenzhen Chengxin Lithium Group Co this March.

It also comes a day after AVZ announced its first tin offtake deal for the project, with industrial metals trader Kalon Resources agreeing to take 600tpa of tin for three years. That arrangement equates to about 43% of the total tin concentrate available for sale from Manono.

More than 80% of Manono’s spodumene now bound in contracts

AVZ managing director Nigel Ferguson said this latest agreement with Yibin Tianyi takes the company’s spodumene concentrate binding offtake commitments to more than 80% of the project’s annual spodumene production, which he said is a “massive endorsement for the Manono project and one that satisfies an important condition precedent for prospective project financiers”.

“At present, we are seeing buoyant market conditions with reported spodumene concentrate prices in China increasing circa 30% in the first quarter of the year, while during the same time, the LME cash tin price has surged circa 30%.”

Mr Ferguson said these price increases bode well for the Manono project’s optimised definitive feasibility study scheduled for completion next quarter.

“Positive market sentiment is greatly assisting our negotiations and while we are not compelled to commit to further forward sales, we are continuing to explore strategic opportunities for our offtakes in both traditional and emerging lithium markets including Europe, US and India,” he added.

A final investment decision to begin developing Manono is anticipated in the June quarter with construction expected to start during the September quarter.

Emerging lithium hydroxide producer in China

Yibin Tianyi is a leading global battery materials producer that is continuing to expand its lithium hydroxide production capacity as a key participant in the supply chain of Contemporary Amperex Technology (CATL), the world’s largest lithium-ion battery maker.

According to AVZ, Yibin Tianyi is set to become one of the largest lithium hydroxide producers in China with an initial production capacity of up to 20,000tpa of lithium hydroxide and future staged expansions expected to increase output to about 100,000tpa.

The company will require about 700,000tpa of spodumene concentrate to satisfy its internal demand after commissioning its planned hydroxide plant expansions.