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Oliver Kazunga Senior Business Reporter
PREMIER African Minerals, the United Kingdom-listed developer of the Zulu lithium project in Insiza, Matabeleland South Province, has disputed the termination of the offtake and prepayment agreement it entered into with China’s Canmax Technologies.
In 2022, Canmax provided US$34,7 million in prefunding to enable the construction of a large-scale pilot plant at the Zulu lithium and tantalum project in Insiza District, Matabeleland South Province.
Under the two firms’ agreement entered into last year, Premier which owns the Zulu project was expected to start shipping spodumene concentrate to Canmax operation in China by March 30 this year.
However, Premier announced that the lithium plant, which recently commenced production, is not able to process sufficient spodumene to meet the conditions of its offtake agreement due to unforeseen operational challenges encountered.
Once fully operational, the lithium processing facility is expected to produce 4 000 tonnes of lithium concentrate per month.
Due to the operational constraints at the Zulu lithium plant, Premier last month issued a Force Majeure notice to Canmax.
Force Majeure is a French term that is a common clause in contracts, which exonerates parties involved in a binding agreement from suffering any liability when an extraordinary event beyond the control of the parties occurs.
Despite being served with the Force Majeure, Canmax has demanded that Premier settles the prepayment amount of US$34,7 million within 90 days.
In its latest update on the matter Premier said: “On June 28 2023, the company received a purported notice of termination of the agreement from Canmax (following service of a Force Majeure Notice on Canmax on the 25 June 2023), which demanded the company (Premier) settle the prepayment amount of US$34,7 million within 90 days.
“The company has disputed the appropriateness of the notice of termination based on legal advice.
“Subsequently, the company has received, and acknowledged, a further written notice from Canmax on 17 July 2023 that there is a dispute under the agreement and notes that both parties are now required to seek to resolve the dispute in good faith by ‘friendly negotiation’.
“To the extent that the parties are unable to resolve the dispute in 10 days, then either party may then refer the dispute to arbitration in Singapore.
“These discussions remain ongoing and nothing has been agreed at this time.”
Several Chinese companies have stampeded to Zimbabwe for the supply of lithium, a globally sought-after mineral used in the production of lithium batteries used in electric cars.
Demand for EVs has soared over the past few years, as climate-conscious consumers snap up cars with electric powertrains, amid soaring fuel prices. Lithium batteries that would power a range of vehicles over the next few years will also be essential to military systems and consumer, medical, and industrial electronics
In regard to plant modification progress at Zulu, Premier said the past three weeks have seen the installation of the Ultra Violet sorters, a new frame to the energy and densification systems (EDS) mill and the hydro sizer.
The commissioning of the upgrades remains ongoing with the UV sorters expected to increase feed grade with resultant efficiency enhancements to recovery and production.
“Furthermore, the hydro sizer is expected to improve efficiency in recovery of correctly sized milled ore.
“Whilst the above upgrades may improve the throughput of the plant at Zulu, it is unlikely to resolve the formal state of Force Majeure as announced on 26 June 2023, which is still expected to endure for approximately 14 weeks.
“The Zulu design, procurement, installation, and commissioning contractor, Stark International Projects Limited (Stark), have confirmed that they intend to produce spodumene from the plant at Zulu over the course of July 2023,” it said.
“At this stage and unless Premier is advised otherwise by Stark, the Stark production projections included in the announcement dated 25 May 2023 remain achievable apart from the month of June 2023 as advised on 26 June 2023.”
Online Reporter