Chinese company withdrawn from exploitation of cobalt mine in Congo
A court in the Democratic Republic of Congo has dismissed the Chinese owner of one of the world’s largest copper and cobalt mines, a major victory for the Congolese government as it seeks to become a bigger player in the revolution clean energy world.
The decision, which removes the mine’s Chinese management for at least six months, stems from a dispute over billions of dollars in payments the Congolese government says it owes to the Chinese owner, China Molybdenum.
Backed by funding from the Chinese government, the company purchased the Tenke Fungurume mine in 2016 from an Arizona-based mining company. The mine figures prominently in the Chinese government’s efforts to dominate key supply chains for the minerals and metals needed to produce batteries for electric vehicles.
Cobalt is essential for electric vehicles as it extends battery life. It is now trading at its highest level in three years.
The New York Times reported in November that mine workers had complained of a dramatic decline in worker safety under Chinese ownership, including claims by safety inspectors that workers had been assaulted. after raising concerns and being offered bribes to cover up accidents. The company disputed those claims, suggesting they were part of a larger effort to discredit it.
Congolese President Felix Tshisekedi last year appointed a commission to investigate allegations that China Molybdenum may have misled the Congolese government over royalties from the mine. The lawsuit filed Monday by the Commercial Court in Lubumbashi came after the country’s state-owned mining company demanded the withdrawal of Chinese management from the mine.
The court’s decision, reviewed by The Times, leaves a third-party administrator responsible for the mine for at least six months while auditors assess the allegations against the company. The state mining company, known as Gécamines, says China Molybdenum has failed to declare hundreds of thousands of tonnes of copper and cobalt reserves buried at the site, depriving the agency of significant annual payments required when new reserves are found and verified.
During the reporting period, Gécamines will retain its 20% stake in the mine, which was the world’s second largest source of cobalt in 2020. Last year, Congo produced 70% of the world’s cobalt.
President Tshisekedi’s office on Monday declined to comment on the decision. China Molybdenum did not respond to a request for comment, but in the past it has denied concealing reservations or owing additional royalties.
Congo has a history of threatening legal action against foreign mining companies; in some cases, the threats were resolved when the companies made payments to government officials, a process some mining industry executives have described as a shakedown.
In this case, Gécamines and mine executives told The Times that the claims against China Molybdenum are based on legitimate concerns about its operations and the belief that the company improperly withheld information.
The court on Monday appointed Sage Ngoie, a Congolese engineer who until recently served as project manager at the mine, as the new temporary administrator of the mine.
Dr Ngoie worked at Tenke for two years overseeing waste disposal and other major engineering tasks and had recently been appointed to a new management role. In a phone interview, he said he was not ready to describe any changes he might make at the mine, which is one of Congo’s biggest employers, with more than 7,000 employees and subcontractors.
According to the judgment, the court gave Dr Ngoie “the task of reconciling the two partners on divergent issues”, including “access to technical information and the determination of the parties’ rights to the mineral reserves”. It also gave him the power to make decisions related to mining operations and the sale of his copper and cobalt. Currently, a large majority of the mine’s cobalt is exported to China.
Congolese government officials are conducting a broader review of contracts signed with Chinese-backed mining companies after complaints about broken promises to Congo, a nation trying to regain its economic footing after a devastating civil war and… years of corrupt leadership. In 2020, Chinese-backed companies owned or had a financial stake in 15 of Congo’s 19 cobalt-producing mines.
Mr Tshisekedi said too much of the profits derived from the country’s metals and minerals – which are increasingly in demand as the world weans off fossil fuels – are not going to the Congolese.
U.S. officials have separately sounded the alarm that China could control the cobalt supply chain and drive up battery prices, a prospect that troubles automakers who have pledged to convert fleets away from the combustion engine in coming years.
“China has a kind of stranglehold on the supply chain,” said Tiffin Caverly, vice president of the Export-Import Bank of the United States, which held a hearing last week on energy metals. renewables and military applications. “Unfortunately I will say I don’t have an answer on how you break this supply chain advantage that China has built. Other than saying you do, it’s absolutely a problem. .
Biden administration officials have sought ways to strengthen ties with Congo and gain access to critical resources like cobalt. In February, a delegation of White House officials traveled to Kinshasa, the capital, for meetings with Mr. Tshisekedi and other senior officials. The US government supports the review of mining contracts in Congo as part of an effort to crack down on corruption.