Jun 25 2019
The internal project validation milestone, or Initial Project Validation, has been successfully achieved and on schedule by the lithium development project in Argentina and the manganese ore production expansion project in Moanda (Gabon).
This internal project validation comes after the operating permits were issued by the local authorities of both Argentina and Moanda (Gabon) in the past several months and also follows major economic and technical studies that have shown the high-value creation potential and feasibility of both these projects. At present, the quest for financing is vigorously ongoing.
The target, with regards to Gabon, is to boost the overall manganese ore production capacity of Comilog from 4.3 Mt/year in 2018 to 7 Mt in 2023, thereby ascertaining the company as a long-term international leader in the manganese ore sector.
Such an increase will decrease cash cost by as much as c. 20%, increasing the market share from the present 10% to 15%. On the basis of the economic and technical feasibility studies, the investment made in Gabon would be precisely €640 m2 over a period of 5 years, with a quicker ramp-up of production.
The Gabonese government has to confirm the project economic balance to preserve the present tax and legal conditions, and specifically the mining contract between the Group and its partner—the Gabonese state. In addition, a comprehensive environmental and social impact assessment (ESIA) was performed on the project according to the most rigorous international standards, those of the World Bank.
The certificate of conformity has been issued by the Gabonese regulatory authorities. In order to fulfill the rise in volumes to be transported, a change in the railway renewal approach was implemented at Setrag to accelerate works as well as boost the reliability of passenger and freight transportation.
In Argentina, where the industrial production of lithium could begin by the end of 2021, the environmental and social impact assessment of the industrial training center and the plant, including the request for tax stability, was validated by the Salta Provincial Mining Secretariat.
Drainable resources are present the Centenario deposit and are estimated at almost 10 million tons of lithium carbonate equivalent, or LCE. It is anticipated that production will occur at 24,000 tons of LCE a year in the initial phase, at a projected production cost among the most competitive in this sector. The investment in Argentina would be precisely €525m3 over a period of 3 years.
As soon as the financing has been achieved as early as the fourth quarter of 2019, final investment decisions may be reached.
In Gabon and Argentina, our two projects are conducted according to a rigorous methodology where each phase is carefully managed by the internal teams and their partners. I would like to congratulate them on the quality of the studies and the successful relationship built with the host communities and public authorities in the regions involved. In line with the Group's twofold strategic ambition, increasing cash generation and diversifying our business portfolio, it is also crucial that these projects reflect our ambition as a responsible and contributive corporate citizen.
Christel Bories, Chairman and CEO, Eramet
Calendar
- 23.10.2019: Publication of 2019 Q3 sales
- 24.07.2019: Publication of 2019 half-year results
- 25.07.2019: Webcast and presentation of 2019 half-year results