The Democratic Republic of Congo’s state miner reiterated a pledge to renegotiate joint ventures with major international investors to help re-establish the company as a major copper and cobalt producer.
The announcement is another concern for investors who have so far unsuccessfully lobbied the government to row back mining legislation adopted in March that introduced new taxes and hiked
royalty rates. Congo is the world’s biggest cobalt producer and Africa’s largest miner of copper.
“Gecamines has decided to renegotiate, in a spirit of equity, all of its existing partnerships for a migration towards partnerships based on production sharing,” Managing Director Jacques Kamenga said at a mining conference in the southeastern town of Kolwezi. Gecamines’ leadership has repeatedly criticized joint ventures with investors including Glencore Plc, China Molybdenum Co. and MMG Ltd., saying current arrangements represent a bad deal for the Treasury and the company.
Kamenga’s team plans to “remake Gecamines as a first-rate miner, not only for production of copper, its base metal, but also for cobalt” because of the metal’s use in the manufacturing of electric vehicles and smartphones, he said.
Cobalt, once an obscure byproduct of copper or nickel mining now used in rechargeable batteries, has surged in importance and value in recent years on the back of growing demand for electric vehicles. Last year, Congo produced two-thirds of global supply, or 81,000 metric tons.In 2017, Gecamines produced less than 16,000 tons of copper, compared with national output of more than 1 million tons, and only 180 tons of cobalt, according to central bank data. In the 1980s, the state-owned company produced more than
400,000 tons of copper and was the largest contributor to Congo’s government budget.
Gecamines will mine 100,000 tons of copper and at least 10,000 tons of cobalt in five years’ time, Kamenga said. Gecamines is no longer content to settle for being a minority shareholder in Congo’s copper and cobalt projects without assured annual benefits, he said.
In June, Gecamines President Albert Yuma announced a deal between the state miner and an unidentified Chinese electric-battery maker to develop two copper and cobalt mines near Kolwezi, which will guarantee Gecamines 16 percent of annual production.
Other contributions to Gecamines’ future output will come from a treatment facility in the town of Lubumbashi, which processes a mountain of so-called tailings, and its partnership with China Nonferrous Metal Corp., Kamenga said. CNMC is financing and building a copper-processing facility at
Gecamines’ flagship Deziwa permit that it will transfer to the state miner once it has been reimbursed.
Three months ago, Gecamines struck an agreement with Glencore to end a legal dispute over its Kamoto Copper Co. unit, which is set to become Congo’s largest copper and cobalt mine.
The state miner sought to dissolve KCC after claiming Glencore failed to address a capital shortfall at the subsidiary. The showdown was resolved when the Swiss commodity giant accepted a $5.6 billion debt-for-equity swap and to make a one-time payment of $150 million to Gecamines.
La Presse du Congo/Bloomberg