Rio Tinto hands Sovereign full control of Malawi graphite project

Africa is forecast to be the fastest-growing region for graphite supply outside of China. (Image courtesy of Sovereign Metals | X Feed.)

Rio Tinto (ASX: RIO) will not become the operator of Sovereign Metals’ (ASX: SVM) (LON: SVML) Kasiya rutile-graphite project in Malawi, leaving the junior with full control of one of the world’s largest undeveloped natural rutile and graphite deposits.

The mining major said its decision reflected a broader shift in corporate strategy and the strategic review of its iron and titanium business rather than any change in Kasiya’s economics or strategic value.

Sovereign will retain Rio’s $60 million investment while assuming sole ownership of the project’s development. Rio’s exclusive rights to market more than 40% of production, along with its consent and pre-emption rights, will also lapse.

“Rio Tinto’s decision reflects its evolving corporate priorities and does not change the quality or strategic importance of Kasiya,” Sovereign said, adding that it will now advance the project independently.

Next steps

Sovereign said the move gives it greater flexibility to pursue financing and commercial agreements as Western governments seek secure supplies of critical minerals outside China.

The company plans to advance offtake memoranda of understanding with Mitsui & Co. and Traxys North America into binding agreements, subject to negotiation, while continuing to work with the International Finance Corporation on a development financing strategy.

Rio remains Sovereign’s largest shareholder with an 18.2% stake and retain the right to nominate a director while its holding stays above 15%.