Exclusive: Congo’s Gecamines to push for copper, cobalt trading share

Supporters of the Union for Democracy and Social Progress {UDPS} gather to await the launch of the first official campaign day for the December 20 presidential election by their leader Felix Tshisekedi in Kinshasa, Democratic Republic of Congo, November 19, 2023. REUTERS / Benoit Nyemba acquire licensing rights

  • Congo encouraged by breakthrough with China’s CMOC
  • Gecamines in off holds talks with Glencore
  • State miner seeks copper, cobalt marketing rights

JOHANNESBURG, Dec 1 (Reuters) – Congo’s state mining group Gecamines says it will push to secure the rights to buy copper and cobalt from mines it owns as it seeks to build its own shares and trade the metals .

To do so, Gecamines must change some terms in its joint venture agreements in the Democratic Republic of Congo, which is the world’s largest supplier of battery cobalt and the third-largest copper producer after Peru and Chile.

Gecamine chairman Guy Robert Lukama said his joint venture partners “can no longer get all that profit from the production”. In an off take agreement, a buyer usually agrees to buy all or a large part of a producer’s future production.

Lukama told Reuters that Gecamines now wants to be able to buy copper and cobalt in proportion to its stakes in joint ventures in Congo with partners including Glencore ( GLEN.L ) and Chinese investors, with its holdings between 20% and 49 %.

It then plans to trade this on its own, which will enable Gecamines to be directly involved in supplying the metals the world needs in the green energy transition, he added.

Lukama said the plan to renegotiate the joint ventures had the support of Congolese President Felix Tshisekedi, who is running for a second term in presidential elections on December 20.

The proposal should not disturb investors, he added.

Tshisekedi has made reforms to Congo’s mining a priority, saying the sector was the backbone of the mineral-rich nation’s economy and should benefit its citizens.

“The rationale is to have a better role for the state and Gecamines in the supply of critical minerals to the world,” Lukama said, adding: “We can’t just sit idly by and watch people take all the cobalt and copper.”

CHINA

Having renegotiated a 2008 minerals-for-infrastructure deal with China, Tshisekedi’s government, if re-elected, will push for greater influence over the commercialization of its minerals.

Congo has since renegotiated key terms of a $6 billion metals deal with China for infrastructure. The government says Sicomine’s copper and cobalt joint venture with Sinohydro Corp and China Railway Group Ltd is heavily skewed in favor of the Chinese companies.

During a visit by Tshisekedi to China in July, Gecamines reached an agreement with China’s CMOC Group ( 603993.SS ). This includes conditions that secured it a right to acquire copper and cobalt produced from Tenke Fungurume Mining equivalent to its 20% stake in the operation, on market terms.

Lukama said the right to buy and market the metals must be extended to all its joint ventures, and Gecamines is able to finance the purchase of metals or it can seek bank financing.

The mining group is in talks with Glencore to receive a share of the withdrawal of metals produced at Kamoto Copper Co (KCC), equivalent to its 25% stake in the mine, Lukama said.

“The ongoing discussions we are having is to extend it to KCC with Glencore and we want to make it a general rule for every joint venture,” Lukama said in an interview.

Glencore declined to comment on the negotiations. Zijin ( 601899.SS ), which is one of the biggest investors in Congo, declined to comment on its joint venture, while another, China Nonferrous Metals Corp, did not respond to emailed questions.

Gecamines’ copper production peaked at 486,000 tonnes in 1986, but last year it was 4,562 tonnes and 19,907 tonnes of cobalt.

Direct trading of metals key to products from power lines and industrial machinery to electric vehicles protects Gecamines from a lack of returns when its joint venture partners make losses, Lukama said.

Lukama said Gecamines plans to conclude negotiations on all partnerships by the end of 2024, adding that the CMOC agreement made it “obvious” that Congo wants a role in the supply of critical metals.

The company was emboldened after emerging from “tough” negotiations with CMOC and Tshisekedi’s stance on the issue had enabled a breakthrough, he added.

Reporting by Felix Njini; Editing by Bate Felix and Alexander Smith

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