Lithium Deposits in Ethiopia

Lithium Deposits in Ethiopia

In addition to producing and exporting tantalum ore, the community-based mining project at Kenticha in Seba Boru of the Kenticha Mines is preparing to expand its lithium output.
The Oromia Mining Group, an organization established by the Oromia Administration, private investors, and the Australian company African Mining and Energy (AME), formed Kenticha Mining plc. Kenticha Mining plc revealed that the value-added operation will benefit all parties involved, including the local community and the government as a whole. The mining scheme has advanced its intentions to participate in social development, including the creation of infrastructure and other social amenities, since it was created to advance the mining industry with contemporary thinking of a community-based mining scheme. Sammy Million, a spokesperson of AME, said, “We hope to alter the perception of the mining development via our community involvement, including information transfer to empower the local population.
According to the corporation, its strategy must follow a structural chain that is directed toward a “win-win” and ensures that the community receives a direct income-sharing topic that is comparable to the business modality. Although it was allegedly closed for almost seven years due to environmental difficulties, the land has been developed under government authority.
The firm has recently followed through on its proposal to create value-added production in collaboration with the regional government by conducting thorough research to further development via value-added manufacturing. Sammy stated, “The lithium processing plant that is manufactured in South Africa is expected to reach Djibouti in the coming few days. We are currently in the final stage of coming up with the commissioning.” Sammy estimates that the commissioning work for lithium concentrate will start in three months. Two other processing facilities are also said to be arriving in the next few weeks. Since the product is in great demand on the worldwide market, if the manufacturing line is successful, it will bring in a significant quantity of foreign money for the nation.
More than 12 nations have shown interest in the offtake deal; Sammy predicted that “this will be a game changer for us.”
The mines are located 600 kilometers south of Addis Ababa in the Oromia region of southern Ethiopia, in the Neoproterozoic Adola Belt, Qenticha location in Seba Boru wereda, Guji zone.
The nation has been exporting tantalum ore of the mineral for over three decades, but critics said that this did not completely help the nation.
AME said that it had extensive experience with significant project developments in Africa and that it was in charge of initiating sponsored projects with a total investment of more than $1 billion throughout the continent.

Because of ongoing legal disputes and political maneuvering about ownership of the deposit as lucrative mining rights, the disputed Kenticha lithium project in Oromia remains mired in uncertainty.

The crucial battery metal lithium is where Kenticha Mining Plc (KMP) claims to have mining and exploration permits in Oromia’s Kenticha kebele, but the company has made little real headway on the project and has received warnings from the new mining minister, Habtamu Tegegn.

KMP has received a notification from Habtamu, who was appointed mining minister by Prime Minister Abiy Ahmed (PhD) seven months ago, about its postponed extraction project.

Habtamu seems to be struggling with a backlog of failed mining projects left over from the administration of his predecessor Takele Uma. This includes the problematic Kenticha lithium project, whose license to mine is scheduled to expire next month, in October 2023, without any output, according to KMP.

Officials from the ministry acknowledged that KMP was being penalized for failing to start production as required by its licensing agreements. According to Sofia Abdulkadir, CEO of the ministry’s License and Mineral Administration, KMP failed to start mining lithium by the predetermined time.

She said that KMP must start manufacturing before the licenses expire. However, the corporation is still stopping and doing nothing since the expiry is next month, in October. The lithium resource there is being squandered, according to Sofia, since nothing is being done.

Other companies can start mining lithium right once, but the CEO claims that since KMP is not operating, they are unable to get the necessary licenses. She made it plain that KMP “must leave” the mining rights if it is unable to begin production as required. The ministry has no difficulties as long as KMP starts by the deadline, she said, adding that “security concerns will not be used as an excuse for failure to perform.”

Although KMP and the Ministry of Mines originally agreed that production would start by the end of 2022 or the beginning of 2023, this plan has not come to pass.

KMP executives recently convened a news conference at the Sheraton Hotel in Addis Ababa last month, alarmed by the protracted delay and approaching deadline for their license. Sammy Million, Deputy General Manager of KMP, said “Our lithium production machinery has arrived at the port in Djibouti and will arrive by October 2023.” The Reporter, however, is informed by industry insiders that KMP has not achieved such advancements.

KMP lacks resources and mining knowledge, much like many large-scale mining operations in Ethiopia.

The second lithium exploration license held by KMP in the neighboring Kenticha is also under investigation.

Just a few days before he resigned from his job and departed the country, on January 10, 2023, the license was issued by the then-Minister of Mines, Takele Uma. Documents seen by The Reporter reveal that Takele got around a court order to give KMP the license again.

Commercially feasible lithium deposits are located in the Kenticha deposit in the Oromia Regional State, roughly 500 km south of Addis Abeba. Lithium had previously been found in the 1980s inside the present KMP exploration license area. KMP is anticipated to carry out a quantification and feasibility analysis during exploration.

In contrast to the Bryan lithium resources, the Kenticha lithium deposits are housed inside hard rock formations. Only since 2017 has the method for extracting lithium from the hard rock material spodumene become economically feasible. The demand for mining permits in Kenticha increased as a consequence of this relatively recent capacity to extract hard rock lithium efficiently.

During the investigation in the 1980s, a group of geologists from Ethiopia and Russia made the first discovery of lithium at Kenticha along with other rare earth metals including tantalum, niobium, and cesium. After that, the Ethiopian Minerals, Petroleum and Biofuel Corporation (MPBC) solely mined tantalum. But as demand for batteries for electric vehicles has increased, so has interest in lithium extraction. The lithium resource in development was previously thought to be unprofitable.

KMP continues to insist that they must demonstrate that extracting the lithium is commercially viable. However, according to reports, the finding was discovered considerably earlier than KMP’s license, indicating that the majority of the exploratory work has already been done.

The region’s altering political climate has benefited KMP’s ascent in the mining industry. The license of a state-owned firm was canceled in 2018 as a result of political developments in Ethiopia and rising claims of regional state authority over natural resources. After that, Kenticha was moved to the Oromia Mining SC in the Oromia Region.

An investment vehicle for the Oromia regional government, Oromia Mining SC is a division of the conglomerate Tumsa Development Group, which is patterned after the endowment fund EFFORT. The Adola gold and Yayu coal mines, as well as the Kenticha tantalum deposit, were taken over by Oromia Mining SC. Other ventures that were once under government control include the Yayu coal mine.

Just 45 kilometers from Kenticha, the neighboring Legedembi gold mine was likewise given to Oromia authority before being ultimately given back to Midroc Gold. Geologists from Ethiopia and the Soviet Union simultaneously examined Legedembi and Kenticha in the 1980s. Many local and foreign mining firms, including KMP, have been fighting for the chance to develop the valuable Kenticha deposit while MPBC’s license is under scrutiny.

Oromia Mining SC and Abyssinia Metals Limited (AML) formed a partnership when Oromia Mining SC successfully acquired the mining rights to Kenticha. AML obtained 51% ownership of the mining activities as per the terms of the agreement. The KMP was created as a consequence of this arrangement; Oromia Mining SC owns 49 percent of it.

The Kenticha mining license is technically under the legal authority of the Australian company AML, however, it is held by African Mining and Energy (AME). On their websites, AML and AME both openly tout Kenticha as their flagship project. The neighboring Okote Gold deposit, which is close to Midroc Gold’s Legedembi mine, is also claimed by AME. AML and AME are led by individuals who work closely together. The senior management group of AME is made up of Stephen Miller, Bruce Tinney, and Neil Warburton, three directors of AML. The official license holder for KMP’s mining operations in Kenticha is Bruce Tinney.

The probable Kenticha deposit is exploring rights that were given to KMP by Oromia Mining SC in July 2021. The permit allowed KMP to search for rare earth elements including niobium, tantalum, and lithium. After promising to spend USD 40 million, KMP was able to win the license. However, the Ministry of Mines revoked KMP’s license in July 2022, barely one year later. The letter claims that KMP was required under its work schedule to start exploratory operations within a year but did not.

In court, KMP contested the license suspension. The company’s attorneys mainly requested an injunction to stop the license from being transferred to other international mining companies. However, the Lideta High Court concurred with the ministry’s decision in a judgment issued in August 2022. According to legal papers, The Reporter was able to access, and the court supported the termination of the exploration rights and rejected KMP’s plea for an injunction.

International mining businesses were enthusiastically pressing Ethiopian authorities for the chance to construct what may turn into a significant lithium development project at Kenticha when KMP’s license was canceled in July 2022. This occurred at a time when demand for the vital battery element lithium was surging worldwide. Mining companies recognized promise for a sizable project that would help satisfy market demands. Politics and legal disputes, however, continue to stifle investment opportunities.

Takele Uma again granted KMP the Kenticha exploration license on January 10, 2023, only a few days before she announced her resignation as minister of mines. The new license’s three-year period spans from 2023 to 2026. Despite a previous court judgment that had upheld revocation, Minister Takele still decided to issue KMP the license once again.

According to some accounts, Takele was under a lot of pressure from the inside to give the license back to KMP. Others said that the action contributed to his resignation. Sofia, a member of the ministry, disputed the account. She informed The Reporter that “KMP’s license was first revoked when their initial one-year term expired.” “They filed a lawsuit, but in the end settled with Takele through negotiations.”

Takele Uma and Bruce Tinney, general manager of KMP, signed a licensing agreement that stipulated that the business had 30 days from the date of issue to deposit half of the 390 million birr in capital contributions they had committed into an Ethiopian bank. The Reporter’s sources, however, said that despite the company’s statements to the contrary, KMP did not meet this condition. Their mining license’s provisions also state that it will expire independently of the new exploration permission.

Despite just having an exploratory license, KMP management announced last month at a Sheraton hotel event that equipment had already arrived in Djibouti and that lithium production would start in two months. According to estimations made by KMP’s management, earnings from lithium exports might total $5 billion over the next five years. According to insiders who spoke to The Reporter, KMP had applied for authorization to harvest lithium from tantalum waste stockpiles left behind by the state-owned MPBC, the previous operator.

“The government issued them a unique mining license specifically for this use. But it ran out of time before they could begin, and they never did,” Sofia said.

Regarding the exploratory permit, Sofia stated that KMP can in theory start mining operations once their prospecting work is over. However, according to official sources, the new administration, which replaces Takele Uma, is thinking about the revocation of KMP’s license as well as its affiliation with Oromia Mining SC.

The websites of parent companies AML and AME, which conflict with the official timetable of licenses provided to KMP by the Oromia regional government, claim that Abyssinia Metals was awarded Kenticha in 2020 after a legitimate bidding procedure.

The Reporter talked to industry insiders and foreign mining firms who questioned how AML and AME acquired the Kenticha license. One source who wished to remain anonymous claimed, “KMP, AML, and AME have no experience in lithium exploration or mining.” “The true world leaders in lithium mining and technology were vying for the license. It is puzzling how AML and AME defeated them.

Major miners from around the globe are still vying ferociously for access as the situation at Kenticha becomes more heated owing to security concerns, disputes with residents, artisanal mining encroachments, and illegal commerce.

The Biofuel Corporation, which first studied and produced Kenticha, also wants to reclaim ownership. Managers have complained that PM Abiy has not responded to their letters asking for reinstatement. They contend that Oromia Mining SC was unfairly given control.

Even though several foreign companies are surrounding and attempting to seize control, KMP Deputy Head Sammy maintains that the business legitimately controls Kenticha.

An insider at the Corporation, which first investigated Kenticha using public monies more than 30 years ago, argues against this claim. They claimed in anonymity that “no entity has the right to privately seize publicly owned national assets like this without proper evaluation or sale.”

According to the source, after political changes in 2018, control at Kenticha was wrongly transferred from the Corporation to Oromia Mining, and staff were compelled to turn over core samples and mining data. They even claim that the corporate offices in Addis Ababa were robbed.

“The Corporation was purposefully rendered unable to function so that others may plunder its initiatives. As a national business, Ethiopia owns the reserves, not certain bureaucrats who are friends with novice mining companies, the knowledgeable insider said.

The personnel of the crippled Corporation, which is now entirely inert, can only pray for resurrection. The HR director, Bacha Faji, admitted that there were no employees on the job at the time.

Goldleaf (Canada), Sinomine (China), ROEL (Russia), and POSCO (South Korea), as well as others from Israel, Australia, and South Korea, are among the companies avidly vying for the strategic lithium license.

According to plans seen by The Reporter, China’s Sinomine offered a USD 200 million investment to start lithium mining in Kenticha. The ROEL company in Russia calculated that it would cost between USD 170-200 million to manufacture 150,000-200,000 tons of lithium yearly. Lithium was sought after by POSCO of South Korea to create batteries for LG goods.

Top international miners have made proposals, but as competition for Kenticha heats up, they have not been successful. When foreign currency declined due to unrest in the north, reports previously said that the government considered selling the Kenticha, Allana Potash, and gas projects for USD 1.5 billion.

Despite lacking mining and exploration capabilities, according to insiders, KMP was able to win the backing of the governing party and military authorities. Sammy Million, the deputy CEO of KMP and a member of the AME board, claims to have obtained permits, but authorities have refused to comment. Some advised The Reporter against looking into things.

Sammy claimed to have drilled 4,000 meters, but analysis suggests otherwise. The only machinery that still exists and was formerly used by the company. Locals claim that the KMP only brings security when it visits.

Kenticha is now home to over 7,000 artisanal miners from throughout Ethiopia. Forces and miners are in charge of different parts. Chinese ceramics companies in the Amhara area and Addis receive lithium rocks from miners, which are then transported to China through the Modjo dry port. Government sources, miners, and foreign companies have verified the existence of a second illicit route that leads to Kenya and eventually the US. Currently, smugglers provide miners less than 10 birr per kg, which they sell for roughly 45 birr per kilo in Modjo.

Sophia stated that numerous methods, including crossing borders, are used to transport minerals out of the nation, including lithium. She did not, however, elaborate on why the government had not made surrounding lithium resources accessible to businesses other than KMP. More than the 5 square kilometers given to KMP, the lithium-rich region of Guji is located.

Officials from the KMP, MoM, and government provide OLF-shine a pass so that legitimate mining firms may visit and carry out authorized operations. Genuine businesses who inquire about visiting Kenticha invariably respond that doing so is risky for security reasons. However, a significant amount of lithium is mined by artisanal miners. According to a person with deep knowledge of the matter, “corrupt authorities are utilizing OLF-shene as a cover to smuggle out minerals

According to a document made public by AML in August 2023, 65 ENDF soldiers arrived in Kenticha in November 2022, and the KMP provided them with lodging, food, and transportation. The paper claims that “civil work is completed for new military camp to be constructed very soon.”

The paper states that KMP will begin lithium production on a big scale in the second quarter of 2024 and will fast-track income generation from lithium export from Kenticha.

KMP’s Sammy and Ethiopia’s State Minister of Mines Million Matiwos both gave presentations during the 21st annual Africa Down Under (ADU) conference, which was held in Western Australia between September 6 and 8, 2023.

African miners connected to Australian businesses and investors attend the annual ADU conference, which is held in Australia.

Sammy identified himself in his presentation as the director of KMP and the Prime Minister of Ethiopia’s counselor on foreign direct investment. However, when The Reporter contacted Sammy, he claimed that his true position at KMP was that of deputy general manager.

Sammy said that Kenticha possesses one of the greatest pegmatite lithium deposits in the world, notwithstanding the lack of a third-party evaluation.

Only three square kilometers, according to him, of KMP’s licensing area contain 88 million metric tons of lithium ore. Sammy claims that a further 50 million tons are also close but beyond KMP’s licensing limits. Tantalum, niobium, cesium, uranium, and other rare earth elements are said to be present in the deposits.

“Civil works are finalized and KMP will soon start lithium production,” Sammy said to the Australian audience last week. “Drilling 40,000 meters deeper would reveal 130 million more tons of lithium ore.”

However, after allegations of financial misuse, AML decided to remove Stephen Miller and Bruce Tinney from its board on September 15. AML is also working on a reverse acquisition via Medcaw Investment Plc to dual-list on the Toronto Stock Exchange.

Sammy also denied any connection between KMP and AML, while attempting to suggest via his presentation that KMP was in charge of Ethiopia’s ability to control the world lithium market. Keeping AML afloat on the Australian stock market, according to sources, was the goal.

State Minister Million, in contrast to Sammy, made no mention of KMP. “Ethiopia still lacks world-class miners,” he remarked. Large quantities of lithium, tantalum, niobium, and other rare earth metals, which are highly sought-after for the electronic industry and sustainable energy, are found in Ethiopia. The main supply of these rare earth metals will be in Ethiopia.

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