Fate of DRC cobalt mine at stake as row intensifies

● A dispute over one of the world’s biggest copper and cobalt mines is escalating in the Democratic Republic of the Congo (DRC), threatening to disrupt exports of essential battery materials and raising questions about the project’s future.

A top executive from state mining company Gécamines said that partner CMOC Group owes $7.6bn (about R122bn) in overdue payments, and accused the Chinese metals producer and trader of posing a threat to national security.

CMOC said it denies the allegations and “strongly” opposes what it views as unjustified attacks, and will defend its rights and interests.

The crux of the dispute is over mineral royalties. Gécamines, which owns 20% of the Tenke Fungurume Mine, accuses controlling shareholder CMOC of underreporting mineral reserves and hiding data to avoid triggering higher payments under their agreement.

Earlier this year a court ordered that the mine be run by a temporary administrator while the two sides sort out their differences. However, CMOC says it is still in charge of managing the project and insists that it is business as usual.

Now Gécamines is firing up the rhetoric, threatening last week to cancel the partnership and take back the rights to the deposit. The company is owed about $5bn in royalties and wants more than $2.5bn in interest as well, said deputy CEO Leon Mwine Kabiena.

“If we determine that it’s not working, even in marriages, there are always divorces,” Mwine said this week. “It’s the biggest rip-off of the last 20 years, and Gécamines is not going to continue like this.”

The escalating fight is important because of the DRC’s outsize role in supplying the world’s cobalt, a vital part of many electricvehicle batteries. Tenke was one of the top cobalt producers last year, and is also a large supplier of copper.

The spat also takes place against the backdrop of President Félix Tshisekedi’s efforts to increase scrutiny of mining deals made under his predecessor, Joseph Kabila.

Its mineral riches make the DRC hard to

ignore for the global mining industry, but many have steered clear because of the perceived riskiness, so the dispute will be closely watched by other international miners and potential investors.

Gécamines’ next step may be to halt Tenke’s mineral sales, Mwine said. The stateowned company has not signed its annual commercial agreement with the venture, and without that Mwine says any exports are technically illegal.

CMOC says the allegations against it are groundless and that royalty payments are clearly defined in its agreement with Gécamines.

“There are people, who ignore the basic facts and act against the established agreement, trying to sabotage the amicable environment of friendly talks by telling lies, making troubles, and attacking partners,” CMOC said in an e-mailed response.

“This is not justified. CMOC opposes it strongly. We will retain all means, including legal means, to defend our legitimate rights and interests.”

CMOC bought control of Tenke Fungurume Mining (TFM) from Phoenixbased Freeport-McMoRan about five years ago in a deal that cost the company more than $3bn.

CMOC announced a $2.5bn injection into the mine last year to double production, raising questions from Gécamines and the government about whether it was underreporting its reserves.

According to its 2010 amended mining convention, TFM is supposed to pay Gécamines

a royalty of $12 for every tonne of proved and probable recoverable reserves of copper beyond 2.5-million tonnes.

Last August, Tshisekedi created a special commission co-ordinated by Mwine to investigate the deal, and Gécamines filed a lawsuit against the company in December. In February, the court decided in Gécamines’ favour, ordering that Tenke be run for at least six months by the administrator, Sage Ngoie Mbayo.

Gécamines backed Ngoie when his appointment took effect earlier this month, but he says that DRC soldiers, who have been protecting the mine from artisanal miners since 2019, barred him from entering. The large military presence at the site, and the refusal to allow Ngoie entry, is a threat to national security, Mwine said.

The deputy CEO also criticised TFM’s mining practices, as well as the number of expatriate workers who he said are doing jobs that could easily be performed by locals at the mine.

“It’s not just money that interests us,” he said. “Money is money, but it’s also the governance of the business. ”—