Chronicle Editor
Premier African Minerals (Premier) finished building a pilot processing plant at its Zulu Lithium and Tantalum Project in Insiza in late March.
The construction was made possible by a prefunding of US$35 million from China’s CanMax, who was to be the sole off-taker of spodumene from Zulu.
Trial production began towards the end of April and plant optimisation was underway in the first days of May. It all looked like Premier was going to make its first delivery of spodumene to CanMax as scheduled but plant issues have made it impossible for the project to meet the timelines set in their off-take agreement.
Noting that they were failing to meet the terms of the offtake deal, Premier, on Monday, declared force majeure – a step taken by supplier of a product, normally occasioned by a natural disaster or war, to protect themselves against claims that could arise from the off-taker over the supplier’s failure to make deliveries as stipulated in an offtake deal.
Unhappy over Premier’s failure to deliver first spodumene having taken US$35 million from it to build the processing line, CanMax on Wednesday scrapped the deal and demanded that Premier pays back the pre-funding, plus interest within 90 days. CanMax, as we report elsewhere today, is also questioning Premier’s justification for declaring force majeure.
In response yesterday, Premier said CanMax cannot scrap the deal and demand payment as the firm (Premier) did not foresee deficiencies on the plant and had no control over them.
Premier’s chief executive officer, Mr George Roach, said the move by CanMax to terminate the agreement is of no force or effect.
“The company has been advised that this notice of termination has no force or effect. Premier has repeatedly extended an invitation to CanMax to attempt to resolve this situation as set out in the agreement, and does so again, now, and publicly.”
The project, one of the more promising in the ongoing international rush for Zimbabwean lithium, has indeed hit a turbulence. And the dispute concerns us. Considering the tone of the exchanges between the two sides, the dispute could become one of the bitterest corporate confrontations in the country in years.
We appreciate that CanMax invested US$35million to enable Premier to build the pilot plant. The Chinese firm legitimately expected Premier to meet its side of the bargain by delivering product as agreed. With Premier failing to do so, CanMax are justified to be disappointed, hence its decision to terminate the agreement.
Zulu has created jobs for scores of locals. It has built decent homes for villagers displaced from the mining site. It recently got Government approval for locals to grow paprika for export. This is a promising project which must not be hampered by the dispute.
We implore Premier and CanMax to find each other for their good, for the good of the local community which had become so invested in the project and the good of the country.
Online Reporter