Congo’s state mining group Gecamines said it will push to secure the rights to buy copper and cobalt at mines it has holdings in, as it attempts to build its own stocks and trade the metals.
To do so, Gecamines needs to amend some terms of its joint venture agreements in Democratic Republic of Congo, which is the world’s top supplier of battery-grade cobalt and the third largest copper producer after Peru and Chile.
Gecamines Chairman Guy Robert Lukama said its joint venture partners “can no longer get all the off take of the production”. In an off take agreement, a buyer usually agrees to buy all or a large portion of a producer’s future output.
Lukama told Reuters that Gecamines now wants to be able to buy copper and cobalt proportional to its stakes in joint ventures in Congo with partners including Glencore (GLEN.L) and Chinese investors, with its holdings ranging from 20% to 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 backing of Congo’s President Felix Tshisekedi, who is vying for a second term in Dec. 20 presidential elections.
The proposal should not unnerve investors, he added.
Tshisekedi has made reforming Congo’s mining a priority, saying the sector was the backbone of the minerals-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 cannot just be sitting passively, seeing people taking all of the cobalt and copper.”
CHINA
After renegotiating a 2008 minerals-for-infrastructure deal with China, Tshisekedi’s government will if re-elected push for a greater say in commercialisation of its minerals.
Congo has since been re-negotiating key terms of a $6 billion metals for infrastructure deal with China. The government says the Sicomines copper and cobalt joint venture with Sinohydro Corp and China Railway Group Ltd is heavily skewed in favour of the Chinese companies.
During a visit by Tshisekedi to China in July, Gecamines reached a deal 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 equal to its 20% stake in the operation, on market terms.
Lukama said the right to buy and market the metals need to be extended to all its joint ventures and Gecamines is able to finance the purchase of metals or it could seek bank financing.
The mining group is holding talks with Glencore to receive a share of the off take of metals produced at Kamoto Copper Co (KCC), equal to its 25% stake in the mine, Lukama said.
“The ongoing discussions we have is to extend it to KCC with Glencore and we want to make it a general rule on every joint venture,” Lukama said in an interview.
Glencore declined to comment on the talks. 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 output peaked at 486,000 metric tons in 1986 but last year, it was 4,562 tons and 19,907 tons of cobalt.
Directly trading the metals that are key for products from power lines and industrial machinery to electric vehicles, shields Gecamines from a lack of returns when its joint venture partners make losses, Lukama said.
Lukama said Gecamines plans to conclude negotiations at all partnerships by end of 2024, adding that the CMOC deal made it “obvious” Congo wants a role in the supply of critical metals.
The company was emboldened after emerging from “tough” negotiations with CMOC and the Tshisekedi’s stance on the issue had enabled a breakthrough, he added.