European Lithium is in the process of securing two promising lithium deposits in Ukraine

Australian mining company European Lithium is in the process of securing two promising lithium deposits in Ukraine, aiming to become the largest lithium supplier in Europe and an essential part of an integrated European battery supply chain.

The two deposits, discovered and subsequently explored in the 1980s and 1990s, are located in Shevchenkivske in the Donetsk region and in Dobra in the Kirovograd region of western Ukraine. Both sites are said to be “under-explored” according to modern methods and “contain significant expected resources”, according to a statement by the Australian company, who have so far made a name for themselves in Europe mainly as the owner and operator of a lithium mining project in Wolfsberg in Carinthia, Austria. A “phased acquisition” of the two deposits has now been agreed, with the transaction expected to close in November 2022.

“I am very excited about the opportunity to acquire the two Ukrainian lithium deposits and combine them with our already advanced lithium project in Wolfsberg. This will not only allow us to become the first local lithium hydroxide producer in Europe, but at the same time form the largest lithium group on the continent and contribute sustainably to securing European demand for lithium,” says Tony Sage, Non-Executive Chairman of European Lithium.

The acquisition of the two lithium deposits in Ukraine is a complex transaction: European Lithium acquired the Ukrainian company Petro Consulting LLC from Millstone. This company has a stake in the two mining projects. In return, Millstone will acquire a 20 per cent stake in Europen Lithium by subscribing for shares worth up to 20 million Australian dollars (about 12.9 million euros) in several tranches. The entire transaction is subject to shareholder approval, receipt of the necessary mining and processing licences and other conditions in consultation with the Australian Securities and Exchange Commission and the so-called JORC rules.

Dietrich Wanke, CEO of European Lithium, emphasises the importance of lithium mining in Europe: “Lithium is currently mined almost exclusively in Australia, Asia and South America. This fact, coupled with the forecast that demand for lithium will more than double in a few years, means a serious situation of dependency for Europe’s industry.” An integrated European battery supply chain, the cornerstone of which is now being laid not least by the intensive activities of European Lithium, could provide a remedy.

European Lithium is listed on the stock exchanges in Sydney and Frankfurt and is represented in Austria by ECM Lithium AT GmbH. Until the completion of the planned acquisition in Ukraine, the completion of the final feasibility study of the lithium project in Wolfsberg, Austria, now has the highest priority, the group says.

Ukraine plans to auction United Mining and Chemical Company

In 2016, Ukraine failed to sell state fertiliser group Odessa Portside Plant (OPP) because of a lack of bids.

Now, Ukraine plans to auction Europe’s largest titanium and zirconium miner, United Mining and Chemical Company (UMCC), on August 31, the head of its state property fund said. If UMCC is sold, it will be the first successful privatisation auction of a large state-owned enterprise since a 2014 uprising led to pro-Western leadership in Ukraine.

“The state is privatising a powerful enterprise … The government has approved the terms of the privatisation,” Dmytro Sennychenko wrote on Facebook.

He said that the starting price for 100% of UMCC had been set at 3.7-billion hryvnias (about $136-million).

The fund says UMCC is among the top 10 global miners of titanium and zirconium ores and its share of the global market was 2.3% for ilmenite, 6.2% for rutile and 1.4% for zircon in 2020.

UMCC provides raw materials which have a wide range of uses including steelmaking, glassmaking and traditional ceramics, with titanium also used as an important alloying agent.

“We hope for high competition and the market price … at a transparent auction,” Sennychenko said.

Ukraine aims to raise about 12 billion hryvnias by selling state assets in 2021 to partially finance the state budget deficit, which was approved at 5.5% of gross domestic product.




Black Iron selected Ukraine’s Cargill for offtake rights production from iron ore project

Cargill has operated in Ukraine since 1991 with offices in several cities to support its more than 500 in-country employees. Cargill’s main Ukraine businesses are in the agricultural sector and include a deep-sea vessel terminal at Port Yuzhny close to the terminal Black Iron plans to use to ship its iron ore.

Black Iron Inc. announced that it has selected Cargill Incorporated for offtake rights on the initial four million tonnes per year of production from its Shymanivske iron ore project and a US$75 million finance facility to be used for Project construction.

Subject to completion of due diligence and successful conclusion of negotiations, Cargill will offtake the production and extend financing of US$75 million for the construction of the Project through a finance facility. Drawdown on this funding will be subject to certain conditions being met, as is customary for this type of transaction, mainly related to the Project being fully permitted and financed for construction. Black Iron and Cargill will now start work on definitive binding offtake and financing agreements which reflect the Proposal. Based on the proposal agreed between Black Iron and Cargill (the “Proposal”), the offtake agreement will be for an initial term of ten years and will include a profit-sharing component which will align the interests of both parties and thereby generate a strong interdependent relationship of benefit to both parties. On the profit share, Black Iron will receive 100% of the 65% iron content fines benchmark price, currently ~$230 per tonne, and share with Cargill a portion of the incremental sale price of its 3% higher (68%) iron content and low impurity magnetite product.

Cargill’s metals business focuses on iron ore and steel trading. Connecting iron ore miners around the world with steel mills and steel end users in key markets, Cargill Metals trades over ~50 million tonnes of iron ore per year and is also a strategic investor of a number of mining operations in North America and Northern Europe.

Black Iron and Cargill Metals agree that, as the world is becoming more environmentally conscious it will naturally turn to ores with a higher iron content and in forms such as pellets/pellet feed that reduce emissions in the production of steel.

Black Iron’s planned 68% iron content magnetite pellet feed is in the top 4% of global production by iron content and is anticipated to reduce emissions generated in the production of steel by an estimated 30% as compared to the more commonly consumed 62% iron content hematite fines. It is envisaged that the high-quality product from the Shymanivske iron ore project will attract a premium price in a variety of markets.

Black Iron’s CEO Matt Simpson stated: “Black Iron received several offtake and investment proposals and chose Cargill based on its proposal striking the optimal balance of investment quantum, structure and shared vision on the increasing demand for high- grade ore as the global ferrous industry is shifting to become greener. Cargill brings tremendous value not only in strengthening the project funding with a US$75 million financing facility but, more importantly, its global network and local footprints, unique industry insight and successful experience in the technical marketing of high-grade ore to customers around the world.”

“We are very pleased to help finance Black Iron’s Shymanivske Project,” Lee Kirk, Managing Director, Cargill Metals said. “A relationship with Black Iron would be an excellent fit with Cargill Metals’ growth strategy to develop a high-grade and CO2 reducing iron ore portfolio, to help customers navigate the environmental and carbon challenges and opportunities ahead, and to support the sustainability efforts and low carbon ambitions of the ferrous industry.”

The selection of Cargill as Black Iron’s preferred offtake purchaser has triggered the following activities to bring the Project to a fully financed state for construction:

–  Update of the Project’s feasibility study will commence upon receipt and review of proposals already requested.

–  Selection and negotiation of binding terms with the preferred engineering, procurement and construction contractor who proposes to invest ~US$65 million in the Project.

–  Commencement of third-party due diligence with a consortium of major international financial institutions on binding agreements for senior debt, US$100 million royalty investment and political risk insurance.

The above activities will be supported by the outputs from the environmental impact assessment and Ukraine land transfer work currently ongoing which were previously announced.




Decrease in Ukraine’s titanium ores export

According to statistics released by the State Customs Service, in January-October 2020, the export of titanium ore and concentrate in monetary terms decreased 15.1%, to $107.45 million compared to the same period in 2019. Ukraine imported 890 tonnes of titanium ore for $748,000 during that period (711 tonnes of ore for $500,000 in January-October 2019).

Vilnohirsk state mining and metallurgical combine (Dnipropetrovsk region), Irshansk state mining and processing combine (Zhytomyr region), Valki-Ilmenite and Mezhdurechensk Mining and Concentration Complexes (both are located in Irshansk, Zhytomyr region) are the main producers of titanium ore in Ukraine. Dnipro-based Velta production and commercial firm built a mining and processing complex at the Birzulivske ilmenite deposit, which has a 240,000-tonne ilmenite concentrate capacity per year.