Aterian Plc Bets Big on Botswana’s Mining

Aterian Plc Bets Big on Botswana’s Mining

• Aterian acquires 90% interest in Botswana’s Atlantis Plc

• Aterian will explore and develop copper and lithium, key metals to the energy transition

• Atlantis Plc holds licences covering over 3,000 square kilometers

• Latest acquisition announcement and recent joint venture signals company’s expected growth trajectory in Africa’s mining sector.

• Last year Aterian entered joint venture with Rio Tinto for exploration of lithium in Rwanda

• Aterian owns copper assets in Morocco

London Stock Exchange-listed mining exploration firm Aterian Plc is on a roll. The company has announced it has signed a share purchase agreement (SPA) to acquire a controlling stake in Atlantis Metals, a private firm based in Botswana.

Under the agreement, Aterian will acquire 90 per cent stake in Atlantis which holds four prospecting licenses covering a combined area of 3,516 square kilometres, with one license targeting copper in the world-renowned Kalahari Copperbelt and three licences for lithium brine exploration within the Makgadikgadi region of northern Botswana.

These two minerals – copper and lithium along with nickel and cobalt – are critical in energy transition. There has been a growing demand for these minerals due to the increasing activity in the manufacturing of electric vehicles, electric vehicle batteries, solar panels, wind turbines and the power grids that connect renewable sources to homes and businesses.

Demand for copper is particularly expected to double by 2035. There is a saying among some miners that copper is the new oil owing to its potential to power the future. However, what is clear at the moment is that mining companies are having a hard time keeping up despite increased bullish bets on the critical metal.

This shortfall threatens to hamper growth for clean energy transition and complicate the desire for countries to achieve net-zero emission goals by 2050. However, companies like Aterian are naturally seeing increased prospects especially in countries like Botswana with finite reserves for critical minerals. As such, they are making heavy investments to stay ahead of the curve.

Charles Bray, Chairman of Aterian, believes this acquisition aligns well with the company’s strategy of focusing on critical metals such as copper and lithium.

Why is this a big deal?

The latest acquisition announcement and recent joint venture signals Aterian’s expected growth trajectory in Africa’s mining sector provided that the company plays its cards well.

To start with, the world is racing to transition towards clean energy and the only way to achieve this transition faster and effectively is to increase exploration and development of metals such as copper, lithium, cobalt and nickel. These metals are critical because they are used in production of electric vehicles, solar panels, EV batteries and wind turbines.

What this means is that the world has to deliberately work towards accelerating new investment in exploration and development of these metals. Currently, electric vehicles remain significantly expensive to acquire compared to fuel-powered cars, and that is because the prices of key metals used in making these cars are still high.

According to data from Cox Automotive, the average price paid for a new EV has fallen significantly—in September 2023, it came down by $14,300 over the prior year. This amounted to a cost of just $2,800 more than the average paid for a new gas-powered vehicle.

With the EV market growing rapidly, the price margin is expected to shrink even more in the coming years as manufacturers produce more affordable models and improve battery technology, the most expensive part of an EV.

Investment like Aterian’s will make it possible for automakers across Germany, America, Korea, Japan and China to price their products cheaply. It remains to be seen how fast companies like Tesla, General Motors, China’s BYB, Germany’s VW and BMW, and Korea’s Hyundai will race to make the acquisition of their EVs affordable.

Major boost to Aterian

The move to acquire a significant stake in Botswana’s Atlantis gives a major boost to Aterian, a company that has been aggressively increasing its footprint on the continent. It makes sense for Aterian to expand its presence in Botswana as the country’s mining sector has gained popularity due to its high reserves in diamond.

Botswana is a mining hot spot.

Botswana is the world’s largest diamond producing country by value and the second largest by volume. Most of Botswana’s diamond production is gem quality. Other minerals mined include nickel, copper, coal, soda ash, gold silver, semiprecious stones, and granite. More recently, exploration has included minerals such as uranium, graphite and lithium.

Having said that, Botswana’s mining output was expected to be flat in 2023 due to the projected decline in diamond production and the weaker global economic environment, but the government said activity would rebound gradually in 2024 and 2025.

Overall mining output in Botswana rose by 8.2 per cent in 2022.

Aterian invested in Rwanda

The development by Aterian comes barely six months since Aterian entered a definitive earn-in investment and joint venture agreement with Rio Tinto Mining and Exploration Ltd and Kinunga Mining Ltd for the exploration and development of lithium in Rwanda.

Aterian was at the time scheduled to invest at least $7.5 million in two stages to earn 75 per cent interest. This would give leverage to the company in Rwanda where efforts to extract lithium have been growing.

Aterian says it has successfully completed the joint venture in Rwanda and that exploration activities are under way.

“Rio Tinto is pleased to be in Rwanda exploring for lithium and to have partnered with Aterian through the Kinunga JV on our first project. Exploration activities are now safely underway, and we look forward to seeing the results of the data currently being collected,” Sandy Walker, the Rwanda Programme Manager for Rio Tinto, said in an update.

Aterian also owns copper assets in Morocco.