Column: Electric dreams turn into a nightmare for battery metals
A sector that was once racing to build new supply has been closing mines and deferring projects as low prices bite into the cost curve.
China’s CMOC Group Ltd hit back at what it called “wild overcharges” from Congo’s state mining company Gecamines, which is demanding compensation for higher copper and cobalt reserves at its Tenke Fungurume mine in the country.
Congo suspects CMOC understated the mine’s reserves to reduce the amount of royalties it pays to Gecamines, which holds 20% of Tenke Fungurume Mining (TFM). CMOC, previously known as China Molybdenum, denies having done so.
The dispute between the two shareholders began in August 2021 when CMOC announced plans to invest $2.5 billion in expanding Tenke Fungurume, the world’s second-biggest cobalt mine. The expansion would roughly double the mine’s production.
“If we have to evaluate all the lost revenue, we are beyond $7 billion,” Gecamines deputy director general Leon Mwine Kabiena said. “We told them CMOC that if they didn’t have enough money to pay the full amount, they should look at how to compensate with the shares and deposits.”
Mwine did not detail how Gecamines arrived at the $7 billion figure. According to a 2010 convention between Gecamines and TFM, TFM must pay Gecamines additional royalties of $1.2 million for every 100,000 tonnes of copper reserves above a baseline of 2.5 million tonnes.
Now Gecamines is asking CMOC for between $2 billion and $2.5 billion in cash and a bigger stake of between 49% and 51% in TFM, an official close to the negotiations said, declining to be named because the talks are confidential.
Mwine declined to comment on the possible request for an increased stake.
“We trust and accept fair evaluation by independent international third-party if there were any opposing views to the additional reserves, but we would not accept any groundless wild overcharges as manipulated by few from GCM,” CMOC spokesman Vincent Zhou said in a written response to Reuters‘ questions.
The feasibility study for the TFM expansion was approved by Congo’s ministry of mines, Zhou added.
CMOC in March said “significant progress” had been made towards resolving the dispute, but in July exports from TFM were suspended on an order from a Congolese temporary administrator, and the company on Monday told Reuters it could take legal action against Gecamines.
(By Sonia Rolley and Helen Reid; Editing by Kirsten Donovan)
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