Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Congo’s state miner Gecamines has halted its court case against China Molybdenum, which last month was stripped of control of its giant copper and cobalt Tenke Fungurume mine in the country, as officials seek a solution to a dispute between the companies.
The Congolese government announced in August it had formed a commission to reassess the reserves and resources at the mine to “fairly lay claim to (its) rights”. Several Gecamines officials were appointed to the commission as the DRC claims it is owed billions of dollars.
In February, a local court named a temporary administrator to run Tenke Fungurume for six months after Gecamines, a minority shareholder in the mine, accused China Moly of refusing to share technical information about the project, including the size of its mineral reserves.
Talks between China Moly chief executive Sun Ruiwen and Prime Minister Sama Lukonde Kyenge over the past weeks seemed to have ironed out some issues.
Congo’s government said on Tuesday it has laid out “a road map to exit the crisis, along with a timeline, in order for the two sides to come to an agreement,” Communications Minister Patrick Muyaya posted on the ministry’s Twitter feed.
“In the meantime, the judicial procedure remains suspended in order to restore a peaceful climate of exchange and harmony between the two parties,” Muyaya said.
China Moly said in a separate statement there has been “significant progress” in the negotiations and endorsed the involvement of an independent third-party to resolve its dispute with the DRC government over new royalty payments.
The Shanghai and Hong Kong-listed company said that engaging an internationally recognized third-party would facilitate the expedited resolution of dispute and further strengthen the firm’s confidence in investing in the DRC.
China Moly acquired its controlling stake in Tenke Fungurume in 2016 for $2.65 billion from US miner Freeport-McMoRan (NYSE: FCX). In 2019, it spent another $1.14 billion to boost its holding to 80%.
Last year, the miner announced it planned to invest $2.51 billion to double copper and cobalt production at the giant mine. The project, expected to be completed and online in 2023, is expected to rise average annual copper output by 200,000 tonnes and increase cobalt output by 17,000 tonnes.
Tenke Fungurume, Congo’s second-biggest copper mine, produced 209,100 tonnes of the red metal and 18,500 tonnes of cobalt last year. The operation is slated to yield much as 267,000 tonnes of copper and 20,500 tonnes of cobalt in 2022.
The DRC has the world’s largest reserves of cobalt, a key ingredient for electric vehicles batteries, and the Tenke mine is one of its largest employers, with about 7,000 workers and contractors.
(With files from Bloomberg)
