AUSTRALIAN Stock Exchange (ASX)-listed Black Rock Mining has signed a memorandum of understanding with the POSCO Group of South Korea to develop the Mahenge Graphite Project  in Tanzania.

Black Rock Mining has a 100% interest in the project, which is spread across 324 square kilometres of exploration ground in Tanzania’s Ulanga district, approximately 250 kilometres north of the border with Mozambique, and 300 kilometres southwest of Tanzania’s largest city, Dar es Salaam.

POSCO is a diversified Korean industrial company, and the world’s fourth-largest steel producer. Through its speciality chemicals unit, POSCO Chemical, the company is a global participant in the lithium ion battery supply chain.

Black Rock believes that an alignment with a strong global player like POSCO will significantly strengthen its position when negotiating with banks on project debt financing, since the project would be able to deliver concentrate into POSCO’s existing China-based supply chain.

The parties to the non-binding memorandum will have 90 days to complete due diligence. The agreement anticipates an initial investment of up to US$10 million by way of a subscription for shares and/or convertible notes in Black Rock. This initial investment from POSCO will be used to fund a programme of engineering works, including design, completion of contracts, and early site access, that aims to establish a construction-ready site by the end of 2020.

Under phase two of the memorandum's agreements, POSCO may make a second investment of an amount yet to be determined, with the funds to be used for project construction. This could come about by subscribing to additional shares in Black Rock, taking an interest in Mahenge Resources (a 100% subsidiary of Black Rock and owner of the Mahenge project), and/or obtaining the offtake rights for concentrate produced by Mahenge Module One.

In March 2020, POSCO Chemical committed US$178 million to a 16,000 tonne per annum synthetic graphite facility in the Pohang Blue Valley National Industrial Complex, located in South Korea’s North Gyeongbuk province. The POSCO group also holds lithium assets in Argentina and nickel assets in Madagascar.