CMOC Resolves Mining Royalties Dispute in DRC
China’s CMOC Group Ltd. has made a breakthrough in its long-running dispute with state-owned partner Gécamines over mining royalties in the Democratic Republic of Congo (DRC). This development could enable CMOC to begin exporting its stockpile of battery metals to global markets.
According to a filing made by CMOC on the Hong Kong stock exchange on Wednesday 19th April, both companies have reached a “consensus on the royalties issue” at the Tenke Fungurume operation.
The exports from Tenke, a major source of copper and one of the world’s largest cobalt mines, were blocked by Congolese authorities since July last year due to the dispute.
No financial details of the agreement were disclosed, and the filing did not mention any plans for exports. However, CMOC has continued to operate the mine throughout the dispute, However, the value of the copper and cobalt hoard stuck in the DRC was estimated to be around $1.5 billion as of late February.
According to CMOC, smooth progress at Tenke will “further release” production capacity at the site, where an expansion is expected to start producing this year. This news caused CMOC’s shares to soar by as much as their daily 10% limit in Shanghai and surged as much as 12% in Hong Kong.
The heart of the standoff was Gécamines’ claim that CMOC was lying about its mineral reserves and that it owed Gécamines $7.6 billion in royalties and interest. The two companies also needed to negotiate a sales contract to set the terms for future exports.
Gécamines officials, a court-appointed administrator of TFM, and Congo’s mines ministry did not immediately respond to text messages requesting comment outside normal business hours.
The resolution of this dispute will be watched closely in the cobalt market, where Tenke accounts for around 15% of global production. The prices of the battery material have fallen by nearly 60% in the past year due to weaker demand and rising supply from other mines.
In its statement, CMOC said it will strengthen joint activities with Gécamines, promote the economic development and well-being of the DRC, and make “greater contributions to friendly cooperations between China and the DRC.”
