Gecamines has bid for Chemaf’s cobalt and copper assets following government opposition to Chemaf’s potential sale to Norin Mining, citing violations of lease agreements. Chemaf, experiencing financial challenges and significant debt, seeks to complete the deal with Norin to fulfill enduring obligations and sustain local employment.
Gecamines, the state-owned mining company from the Democratic Republic of the Congo (DRC), has formally submitted a bid for the cobalt and copper assets belonging to Chemaf Resources (CRL), as reported by Bloomberg News. This development arises in the wake of opposition from the DRC government regarding Chemaf’s planned sale of its copper and cobalt mines to Norin Mining, a subsidiary of the state-supported China North Industries (Norinco). In June 2024, Chemaf, in partnership with commodities trader Trafigura, had come to an agreement to sell its mining assets in the DRC to Norinco. However, the Congolese Government’s stance indicates that such a sale contravenes the lease agreements between Chemaf and Gecamines. Despite having sought a buyer for nine months, Chemaf continues to navigate the challenges posed by the government’s disapproval while attempting to finalize its agreement with Norin. Insider sources have indicated that Gecamines is pursuing the acquisition of Chemaf, although specifics regarding this bid remain undisclosed. The Congolese Government exercises a 5% ownership stake in Chemaf. The impetus behind Chemaf’s asset sale stems from financial difficulties that have impeded the expansion of crucial projects, namely the Etoile and Mutoshi projects, due to declining cobalt prices. The firm asserts that the acquisition by Norin is crucial to facilitate the resumption of stalled projects and to fulfill its obligations to creditors. A spokesperson for Chemaf noted that the company is “committed to completing the proposed transaction with Norin Mining, which will enable it to address its overdue loans and trade creditors while securing employment for its local Congolese workforce.” Furthermore, Chemaf holds additional undeveloped licenses for copper and cobalt in the region, reporting approximately $690 million in debt as of September 2023.
The Democratic Republic of the Congo is renowned for its substantial mineral wealth, particularly in cobalt and copper. Gecamines is one of the largest state-owned mining entities in the DRC, possessing rights to various mining assets under agreements with private entities like Chemaf. The mineral industry, especially cobalt mining, has attracted significant foreign investment, particularly from Chinese firms. Chemaf, associated with Trafigura, has faced challenges related to debts and declining prices of cobalt, prompting its attempts to sell off its mining assets to sustain operations and meet financial obligations. The government’s intervention in the sale process reflects its interests in maintaining control over national resources and ensuring equitable economic benefits.
Gecamines’ bid for Chemaf’s cobalt and copper assets underscores the competitive and regulated nature of the DRC’s mining sector, particularly amidst financial difficulties faced by Chemaf. The government’s opposition to Chemaf’s intended sale to Norin Mining highlights the complexities of mining agreements and state ownership in the DRC, as well as the pressing need for companies to resolve their financial predicaments while navigating the regulatory landscape. Chemaf’s commitment to its workforce and creditors further illustrates the significance of maintaining stability in the local mining industry.
Original Source: www.mining-technology.com
