Sovereign Metals (ASX:SVM) has announced it will pursue a US-focused critical minerals strategy after Rio Tinto (ASX:RIO) declined to become operator of the Kasiya Rutile-Graphite Project in the Republic of Malawi.
Rio Tinto notified Sovereign it will not exercise its right to elect operatorship under their Investment Agreement, citing a change in corporate strategy regarding its titanium business. The company said the decision reflects its strategy to focus on iron ore, copper, aluminium, and lithium.
Sovereign says the decision does not affect the project’s fundamentals, economics, or findings from its Definitive Feasibility Study (DFS) completed earlier this year.
As a result of the decision, certain rights conferred on Rio Tinto under the Investment Agreement cease, including exclusive marketing rights to 40% of annual production and pre-emptive rights over third-party acquisition offers. Rio Tinto continues to hold approximately 18.2% of Sovereign and retains the right to appoint a nominee director while it holds at least 15% of the company.
Sovereign says it will prioritise commercial discussions with Mitsui & Co (TYO:8031), Traxys, and other potential partners targeting US and allied markets for rutile and natural graphite.
Sovereign also plans continued engagement with potential offtake partners and US government stakeholders regarding the heavy rare earth co-product opportunity.
“Sovereign looks forward to Rio Tinto continuing as a supportive shareholder as it builds on this important period of technical and operational progress, with the company now well positioned to prioritise a US-focused critical minerals strategy,” Chairman Ben Stoikovich says.
Kasiya contains titanium, graphite, and heavy rare earths, all designated as critical minerals by the US.
In 2023, Rio Tinto invested over $60 million in Kasiya and provided technical input through the Sovereign-Rio Tinto Technical Committee. The expertise contributed to the successful delivery of the Pilot Mining and Rehabilitation program, which generated real-world operating and mining data incorporated into the DFS.
Sovereign says it will continue pursuing development financing through the International Finance Corporation and other development finance institutions supporting the project.
Write to France Pinzon at Mining.com.au
Images: Sovereign Metals
