CMOC gets Congo deal to free stockpile of copper and cobalt

Aerial view of the processing plant at China Molybdenum’s Tenke Fungurume mine in 2015. (Image courtesy of Freeport-McMoRan Copper & Gold)

China’s CMOC Group Ltd. made a breakthrough in a long-running spat over mining royalties in the Democratic Republic of Congo, potentially paving the way for its massive stockpile of battery metals to start flowing to global markets.

CMOC and its state-owned partner Gécamines reached a “consensus on the royalties issue” at the Tenke Fungurume operation, according to a Hong Kong stock exchange filing Wednesday. Exports from Tenke — a major source of copper and one of the world’s biggest cobalt mines — have been blocked by Congolese authorities since last July because of the dispute.

No financial details of any agreement were given, and the filing made no mention of plans for exports. CMOC has kept the mine running throughout the dispute, and the hoard of copper and cobalt stuck in the African nation was worth about $1.5 billion by late February, according to Bloomberg calculations at that time.

Smooth progress at Tenke will “further release” production capacity at the site, where an expansion is expected to start producing this year, CMOC said. Its shares soared as much as their daily 10% limit in Shanghai, and surged as much as 12% in Hong Kong.

The heart of the stand-off was state miner Gécamines’ claim that CMOC was lying about its mineral reserves, and that it owed Gécamines $7.6 billion in royalties and interest. The pair also needed to negotiate a sales contract to set the terms for future exports.

Gécamines officials, a court appointed administrator of TFM and Congo’s mines ministry did not immediately respond to text messages requesting comment outside normal business hours.

The fate of CMOC’s shipments from Congo will be watched particularly closely in the cobalt market, where Tenke accounts for some 15% of global production. Prices of the battery material have tumbled nearly 60% in the past year on weaker demand and rising supply from other mines.

CMOC’s statement said the company will strengthen joint activities with Gécamines, promote the economic development and well-being of Congo, and make “greater contributions to friendly cooperations between China and the DRC.”

(By Annie Lee, with assistance from Michael J. Kavanagh)


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