The United States has reportedly intervened in the sale of a key mine in the Democratic Republic of the Congo to a Chinese arms manufacturer in order to prevent Beijing from further strengthening its control over crucial mineral resources. According to sources cited by the Financial Times on Friday, the US officials have encouraged the state-owned mining company of the Democratic Republic of the Congo, Gécamines, to review its leasing contract with Chemaf Resources Ltd., a company involved in a deal with a Chinese-funded enterprise. The US involvement is seen as a move to thwart Beijing’s expansion into the mining sector in the DRC.
The subsidiary of China’s defense industry enterprise, Norin Mining Ltd., reached an acquisition agreement with Chemaf last week, aiming to expand Beijing’s mining operations in the DRC. The transaction, announced on Thursday, is expected to be completed in the fourth quarter of 2024.
A research institute in mainland China called “National Recovery Consultation” stated that this acquisition is a strategic move to secure crucial cobalt and copper resources for China’s electric vehicle industry. Cobalt, a key battery metal, has seen a price drop due to oversupply in recent years. Chemaf, facing financial difficulties due to cobalt price fluctuations and its rapid expansion plans, is seeking new investments. The company obtained a $600 million loan from the trading giant Trafigura in 2022 to acquire a new mine and two processing plants in the DRC, but the project remains unfinished with mounting debts.
The DRC is the world’s largest producer of cobalt and the second-largest producer of copper. The acquisition deal could position Norin as one of the largest suppliers of cobalt, while the US is also striving to develop its own independent supply chain for key metals in the energy transition sector.
Chemaf has not disclosed the acquisition amount to be paid by Norin but mentioned that the deal would enable it to clear existing debts and fulfill obligations to creditors. The transaction has received approval from the DRC government but still requires regulatory approval from Chinese supervisory authorities.
If confirmed, the US intervention in this deal signals an intensifying competition between the West and Beijing for control over minerals essential for clean energy infrastructure. The US State Department did not respond to requests for comments from the Financial Times.
Chemaf, a lessee of Gécamines, holds the license for its flagship project, the Mutoshi mine. Gécamines stated that it should have been informed in advance about Chemaf’s transaction with the Chinese company, and any change in “direct or indirect” control should not occur without its approval. The board of Gécamines reportedly vetoed the deal after learning about it through the media.
Chemaf claimed that it had notified Gécamines before announcing the sale but had not received any response from the state-owned mining company. The company added that the transaction has obtained approval from the DRC’s Minister of Mines.
Gécamines has previously intervened in the sale of mining assets, including blocking deals, renegotiating rights, or extracting payments. The newly appointed chairman, Guy Robert Lukama, aims to sell more ore produced in its concession areas and explore further regions for mining.
An individual close to Gécamines, who preferred to remain anonymous, stated that the company is taking steps to protect its contractual rights and evaluating the best options for developing the project.
Norin Mining Ltd. describes itself as a major supplier of equipment for the Chinese land army and a leader in international cooperation within the Chinese defense industry. The assets that Norin hopes to acquire from Chemaf include two producing mines, Mutoshi and Etoile, and several other mining permits that may have additional resources.
Furthermore, cobalt and copper are crucial metals for military equipment as they are used in fighter jet superalloys, electrical wiring, and ammunition. A UN report in 2020 found that Norin Mining Ltd. was one of the Chinese companies supplying weapons to the DRC at least eight times between 2015 and 2019. Since 2020, the US Treasury has banned US companies or individuals from holding shares in Norin Mining Ltd.