Gecamines Opposes Chemaf Sale to Norin Mining, Citing Ownership Rights

July 3, 2024July 3, 2024 Constance

Gecamines, the Democratic Republic of Congo’s state-owned miner, announced its opposition to the sale of Chemaf Resources Ltd., backed by Trafigura Group, to China’s Norin Mining Ltd.

Chemaf holds the lease for its flagship Mutoshi project from Gecamines, which asserted its right to reject the transfer of ownership in a statement on Monday. In response, Chemaf noted that the Congolese government had approved the transaction.

Struggling with a downturn in cobalt prices, Chemaf has been searching for a buyer to help complete critical projects like Mutoshi.

Last Thursday, Chemaf announced a sale agreement with Norin Mining, aiming to settle debts and meet creditor obligations.

In 2022, Trafigura arranged a $600 million loan for Chemaf to develop Mutoshi and upgrade its Etoile copper and cobalt operation. As of September, Chemaf reported approximately $690 million in debt, with $510 million drawn from Trafigura’s loan.

Gecamines learned of the deal through the media and, on Friday, its board unanimously rejected the transaction, asserting its rights as lessor and owner.

Gecamines stated it has “a right of prior information and approval in the event of any change of control, direct or indirect.”

Despite the opposition, Congo’s government has already expressed written support for the transaction. Chemaf’s subsidiary in the country looks forward to continued engagement with Gecamines to obtain approval from the state miner, according to a statement from Chemaf on Monday.

Chemaf’s decision to seek a buyer followed a court ruling in Congo requiring the parent company to address financial obligations of its local unit.

The proposed sale to Norin Mining is expected to provide the necessary capital to complete the Mutoshi and Etoile projects, Chemaf emphasized.

Trafigura declined to comment on the matter.