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Glencore is set to boost its presence in the Democratic Republic of Congo to secure essential metals for electric car batteries. The global commodity trading company aims to expand in the rapidly growing market by making its first-ever investment in a lithium mine in the central African nation. Glencore has reached a deal with Tantalex, a Toronto-listed group that explores for lithium in the DRC. Under the agreement, Glencore will provide up to $55mn to Tantalex over three stages in exchange for the rights to sell lithium from the Manono tailings project to refineries, automakers, and battery manufacturers for a period of six and a half years.
The majority of the financing will go towards funding a third of the estimated $150mn capital expenditure required to extract spodumene concentrate, which contains lithium, from waste at a former tin mine. Tantalex aims to start production in 2025. “This will be Glencore’s first investment in lithium in the DRC. They will bring their expertise to the country,” said Hadley Natus, chair of Tantalex. “With battery metals, it’s impossible to ignore the DRC.”
While the DRC is crucial for Glencore in terms of sourcing copper and cobalt, the company has a complicated history in Africa, including in the DRC. Glencore admitted last year to paying bribes for oil supply deals in multiple African countries and paid $180mn to the DRC to settle corruption claims. Swiss and Dutch authorities are currently investigating the company’s past activities in the DRC.
Glencore has been developing a strategy to expand its trading book for lithium in order to complement its existing portfolio of metals crucial to the energy transition. Through its recycling business, Glencore already ranks among the world’s largest recyclers of used portable electronics, including lithium, which it sells back to customers. The company aims to finance lithium mines in addition to its recycling operations.
While the DRC project may be small, producing enough lithium for approximately 3.8mn electric vehicles over its lifetime, it could help develop infrastructure, such as roads, for another potential project in the nearby Manono area. The Manono area holds Africa’s largest undeveloped lithium deposit.
In addition to the DRC agreement, Glencore recently signed a $400mn financing deal with France’s Eramet for an Argentine lithium project. Glencore’s senior management has stated that it prefers the traditional trading model of providing debt financing in exchange for the supply of material and does not plan to directly operate or hold large equity stakes in lithium mines. Chief Executive Gary Nagle has consistently downplayed the hype around the lithium market, asserting that supply can be easily increased to meet demand given the widespread availability of the commodity.
As part of its strategy, Glencore is also considering taking some of Alita’s debt, an Australian lithium miner currently under administration, in exchange for future lithium output. The DRC transaction is subject to finalization of the contract and completion of due diligence by Glencore.
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