The Democratic Republic of Congo’s state miner, Gecamines, has asserted its authority over the sale of cobalt producer Chemaf Resources Ltd. Gecamines stated that any acquisition involving the key mining permit for the Mutoshi project must receive its approval.
Chemaf put itself up for sale in September, and while the process is in its final stage, no winning bid has been announced. The Trafigura Group-backed firm is working to develop one of the largest copper-cobalt mines and processing plants in Congo, using a permit leased from Gecamines.
Gecamines chairman Guy-Robert Lukama warned that any transaction to change ownership of the lease without prior approval would be void. “If they sell, we will withdraw the lease agreement,” Lukama said. He emphasized the necessity of Gecamines’ consent for the sale to proceed legally.
Chemaf responded by stating that it has been engaging with the highest levels of the Congolese government and has already secured approval from the mines minister. “We are preparing to seek formal approval from Gecamines SA, our respected partner in Mutoshi,” a Chemaf spokesperson said.
The newly appointed mining minister, Kizito Pakabomba, and his predecessor, Antoinette N’Samba Kalambayi, have not commented on the issue.
Chemaf secured a $600 million loan from Trafigura in late 2022 to fund its expansion. However, the mine development exceeded its budget, forcing Trafigura to seek additional funding. Chemaf subsequently offered itself for sale, asking bidders to commit $250 million to $300 million to complete its projects.
The company has been planning a large complex at Mutoshi in Congo’s Lualaba province since at least 2018. The site is projected to produce 16,000 tons of cobalt and 50,000 tons of copper annually. Any move by Gecamines to withdraw the permit could threaten efforts to find a buyer, complicating the fate of the unfinished mining complex. However, this would not affect the dozens of other licenses that Chemaf owns directly.
Trafigura, as “one of the creditors to Chemaf,” stated it is “not managing or influencing decisions on the investment process.”
Lukama noted that Gecamines has contacted Chemaf several times since the sale process began but has not received a reply. The 25-year lease agreement secured in 2015 is deemed “non-performing,” giving Gecamines the right to terminate it, he said.
Chemaf has invested about $520 million in developing Mutoshi, which is approximately 80% complete. The company has attributed the funding gap to inflationary pressures in the global mining sector, a weak cobalt pricing environment, and the unavailability of the full loan from Trafigura.
Gecamines’ insistence on approving any sale involving the Mutoshi permit underscores the complexities of mining operations in Congo. The state miner’s intervention could influence the future of Chemaf’s ambitious project and impact potential buyers’ interest.
As the sale process continues, all eyes will be on how Gecamines and Chemaf navigate these legal and financial challenges. The outcome will likely have significant implications for Congo’s mining industry and the global cobalt market.
Source: Mining.com
