In a recent report from Reuters, the government of the Democratic Republic of the Congo, commonly known as the DRC or Congo (Kinshasa), expressed opposition to Chemaf SA’s plan to sell its copper and cobalt mines in the country to Norin Mining, a subsidiary of the Chinese defense and industrial giant North Industries Corporation (NORINCO), also known as China North Industries Group Corporation Limited.
Chemaf is a long-term partner of the commodity trading company Trafigura. In June, Chemaf announced its agreement to sell its mining sites in Congo (Kinshasa) to Norin Mining, a company supported by the Chinese defense and industrial powerhouse, China North Industries Group.
Due to a decline in cobalt prices, the expansion projects at Chemaf’s Etoile and Mutoshi mines were stalled, leading to financial constraints and prompting the sale of the company last year. At that time, Chemaf stated that it had obtained approval from the Congolese government for the sale.
According to records from a ministerial meeting seen by Reuters last Friday, Congo (Kinshasa) Minister of Mines, Kizito Pakabomba, stated that the transaction violated the lease agreement between the state-owned mining company Gecamines and Chemaf, and recommended halting the deal.
The ministerial meeting endorsed the recommendation from the Ministry of Mines and decided to halt the transaction.
“The transaction blatantly contravenes the outsourcing contract terms signed between Gecamines and Chemaf. Following Gecamines’ objection, it is proposed to stop the current transaction,” the meeting records indicated.
Last month, Gecamines stated that they have the mining rights in the Chemaf area and opposed the deal with Norin Mining, asserting their right to review any changes in control of key assets.
A spokesperson for Chemaf mentioned that the company will continue to work with the Congolese authorities to advance the previously agreed upon deal.
Pakabomba took office about two weeks before Chemaf announced its deal with Norin Mining, during the swearing-in of the new government.
Congo (Kinshasa) is the world’s largest supplier of cobalt. With support from Beijing, Chinese mining companies have become major investors in Congo (Kinshasa). Beijing is actively seeking copper and cobalt resources to support China’s electric vehicle industry.
In 2022, Trafigura arranged a $600 million loan for Chemaf to fund the development of the flagship Mutoshi project leased from the state-owned mining company Gecamines (expected to produce 16,000 tons of cobalt and 50,000 tons of copper annually, potentially becoming one of the world’s largest cobalt mines) and upgrade the Etoile operation. Chemaf previously indicated that as of September last year, its debt stood at approximately $690 million, including around $510 million drawn from Trafigura’s loan.
The deal with North Industries Group will enable Chemaf to fulfill its obligations to creditors and complete the expansion projects.
North Industries Group already owns copper-cobalt businesses in Congo (Kinshasa) with Comica and Lamikal, producing nearly 90,000 tons of copper last year.