China's CMOC Group has resolved a dispute with Gecamines over royalty payments by Congo's Tenke Fungurume copper and cobalt mine. The deal is expected to free up thousands of tons of stockpiled cobalt, with analysts warning the metal's prices will drop even further. “This is the result of candid communication and friendly consultations and a ‘win-win’ after taking into consideration the short-term interests and long-term development of the relationship between both parties,” CMOC said in statement, which saw its share price jump by the daily limit of 10% in Shanghai. According to Congolese mining analyst Christian-Geraud Neema, the deal put to rest a dispute dubbed as “the poster child for the beginning of the end for Chinese miners in the Democratic Republic of the Congo”. Gecamines, a Congolese state-owned commodity trading and mining company, has a 20% stake in Tenke, the world’s second-largest cobalt mine. CMOC owns the other 80%.
The two companies had been at loggerheads since 2021 after Congolese officials accused CMOC of under-reporting copper and cobalt reserves to reduce royalty payments, and established a commission to reassess them. There was also complex politics involved, with the offices of Prime Minister Jean-Michel Sama Lukonde and President Félix Tshisekedi jostling to lead the contract review, as the latter sought to boost his re-election prospects later this year. Observers also said the United States could have been the invisible hand pushing Tshisekedi to revise previous deals with China. In February last year, Tenke was placed under administrative control by a local commercial court over Gecamines’ complaints that it was not getting its fair share. However, the Congolese government withdrew the case about a month later, with both parties agreeing to settle the matter out of court.
Exports from the mine were also suspended in July by a court-appointed administrator until shareholders agreed on a new sales contractor. CMOC, formerly known as China Molybdenum, meanwhile continued mining at Tenke. The mine, which produces about 1,500 tons of cobalt and 20,000 tons of copper each month, has since built up a stockpile of at least 16,000 tons of cobalt hydroxide. According to Benchmark Mineral Intelligence this material can now enter the global market, potentially putting downward pressure on the already low prices for cobalt, an essential component of electric vehicle batteries and electronics. The London-based pricing agency said cobalt reserves would take at least a year to clear. Cobalt prices have already dropped 75% from a three-year high last April as demand weakens. Congo is by far the world’s largest exporter of cobalt, accounting for about 70% of global production and supplying China with 60% of its cobalt needs, while Zambia is rich in both copper and cobalt. Chinese companies have made massive investments in both countries, the South China Morning Post reports.
