Rio Tinto became a major shareholder in Sovereign Metals in July 2023. Through the move, Rio Tinto eyes the Kasiya project in Malawi. This project is expected to produce 244,000 tonnes of graphite and 222,000 tonnes of rutile annually over 25 years.

British-Australian Group Rio Tinto has increased its stake in Sovereign Metals to 19.9%, up from 19.76%. Sovereign Metals, owner of the Kasiya rutile and graphite project in Malawi, announced the increase in statement dated September 10. 

This move brings Rio Tinto to the maximum shareholding allowed under Australian stock exchange rules before it must make a takeover offer. While no takeover has been announced yet, Australian consultancy SP Angel believes it is likely.

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"We believe it is too early for Rio Tinto to make an outright offer for Sovereign Metals, but it is certainly a finality for Rio Tinto once the technical quality of the project is confirmed and an agreement has been reached with the Malawi government to operate the Kasiya project," said SP Angel in a note published in July 2023.

The effective acquisition of the project by Rio Tinto would give the firm control over a project capable of producing 244,000 tons of graphite and 222,000 tons of rutile over 25 years. This would allow Rio Tinto to reduce the carbon footprint of its titanium dioxide production. "Natural rutile is a low-carbon route to high-quality titanium," stated Martin Alciaturi, CFO of Sierra Rutile.

Graphite is increasingly in demand for electric vehicle batteries, and according to the International Energy Agency, global demand for graphite could double by 2030 and quadruple by 2040. Rio Tinto has made battery minerals a strategic priority, creating a dedicated division in 2021. The Kasiya project's graphite would enhance Rio Tinto's battery minerals portfolio.

Emiliano Tossou