Gécamines is exercising its right of pre-emption for the mining permits of Chemicals of Africa

Democratic Republic of Congo’s state-owned mining company, Gécamines, has submitted a bid for Chemaf Resources Ltd.’s permits in the country, a few months after announcing its intention to block a previous agreement to sell the copper and cobalt company to a Chinese investor.

Chemaf, backed by the Trafigura group, spent nine months searching for a buyer before announcing the sale in June to the Chinese company Norin Mining Ltd. Chemaf says it is still working to finalize the deal, but it has faced opposition from the government and the state-owned mining company Gécamines, which holds a key permit operated by Chemaf under a lease agreement for its flagship project.

According to some Gécamines officials, the state-owned mining company is very interested in acquiring Chemaf, to which it has already made an offer under the pre-emption clause.

The battle over Chemaf highlights the efforts of the Democratic Republic of Congo, now the world’s second-largest copper producer, to exert greater control over its mining sector, where China dominates production.

Chemaf’s Mutoshi project is on track to become one of the world’s largest cobalt mines, a mineral extracted alongside copper and used in electric vehicle batteries.

If Gécamines were to acquire the Chemaf unit, it would represent a break for the national mining company, which has always been a minority partner in joint ventures. The Congolese government already holds a 5% stake in the company.

Chemaf declined to comment on Bloomberg’s questions about Gécamines’ offer. The company “remains committed to completing the proposed transaction with Norin Mining, which will allow it to settle its outstanding loans and commercial creditors while guaranteeing employment for its local Congolese workforce ,” a spokesperson for the Indian-owned Shiraz Virji company said in an email.

Trafigura, which financed Chemaf’s projects, also declined to comment.

Chemaf has struggled to complete projects, notably the Mutoshi project, which is under a lease agreement with Gécamines, following the drop in cobalt prices. It stated that the proposed acquisition by Norin would allow it to complete the stalled work on two assets and fulfill its obligations to creditors.

The company also owns dozens of undeveloped copper and cobalt licenses in the Haut-Katanga and Lualaba provinces. Chemaf previously reported having approximately $690 million in outstanding debt as of September 2023.

By the Editorial Staff with Bloomberg