China Molybdenum Lost Its Cobalt Mine In Congo Amid Electric Vehicle Race
The Democratic Republic of Congo has effectively repo’d China Molybdenum from its ownership of the cobalt-producing Tenke Fungurume mine. A court ruling removed the Chinese company as the owner of one of the largest cobalt mines in the world.
The country’s own mining enterprise, known as Gécamines, sought to remove the China-based miner from the management of the mine following claims that the firm underdeclared copper and cobalt reserves at the site. In effect, the firm failed to pay the proper royalty payments to the Congolese government.
Giving effect to the court decision, a third party will be taking over the mine operations for six months while Gécamines still gets to keep their 20% equity.
The series of events stemmed from an investigation commission instituted by Congolese President Felix Tshisekedi, who is known for his combative stance against China. Tshisekedi has called for a review of mining contracts signed by his predecessor with Chinese companies, including the corruption allegations surrounding the mining consortium Sicomines.
This is not the first time the African country flexed its muscle against Chinese mining companies operating on their land. In August 2021, Mwenga Governor Theo Ngwabidje Kasi ordered the closure of six mining companies to ease the tension between Chinese gold miners and Congolese locals living in the area.
“Minerals are being exploited without respecting the mining code and regulations,” said Christian Wanduma, a lawyer advising one of the affected communities.
China seemed to be treading a balancing act in response to the said closures. Director-General of China’s Department of African Affairs Wu Peng said they are also investigating the alleged violations and “will not just suspend the companies’ operations, but ask them to stop the relevant business.”
But when it comes to China Molybdenum and the Tenke Fungurume mine, the stakes are higher. Congo supplies 60% of global cobalt reserves–the largest in the world–and the Chinese firm’s operations at the mine contribute to it being the second-largest cobalt producer in the world.
In 2019, China Molybdenum stated that the falling cobalt prices made the mine a “deficit zone.” But with the electric vehicle industry race driving cobalt prices to a three-year high, the stability of China’s relationship with the African country is integral to boost its own EV industry.
Around 15 out of 19 cobalt-producing mines in Congo are either owned or partly owned by Chinese companies.
Information for this briefing was found via TFIGlobal. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
