(Bloomberg) -- Democratic Republic of Congo signaled that it opposes the sale of Trafigura Group-backed miner Chemaf Resources Ltd. to China’s Norin Mining Ltd.
Chemaf – which leases the permit for its flagship Mutoshi project from state-owned miner Gecamines – announced in June it had agreed a transaction with Norin that would allow the firm to fulfill its obligations to creditors and complete expansion works. At the time, Chemaf said it had approval from the Congolese government.
Gecamines last month rejected the proposed deal, adding that it had the right to approve a change of control over the key asset.
Congo Mines Minister Kizito Pakabomba informed ministerial colleagues of Gecamines’ opposition to the transaction at a meeting in the capital, Kinshasa, on Aug. 23, according to minutes seen by Bloomberg. The council of ministers adopted Pakabomba’s recommendation that the deal be stopped as it was in “flagrant violation” of the agreement between Chemaf and Gecamines, the minutes showed.
Pakabomba took up his current post about two weeks before Chemaf announced the deal with Norin, when a new government was sworn in. A spokesman for the minister didn’t immediately respond to a request for comment.
A spokesman for Chemaf, owned by businessman Shiraz Virji, said the company “continues to work with all relevant stakeholders to progress the signed transaction.” Norin and Trafigura also didn’t immediately respond to requests for comment.
Chemaf has been seeking a buyer for almost a year after a slump in cobalt prices left it struggling to finish projects. That included Mutoshi, which would be capable of producing 16,000 tons of cobalt and 50,000 tons of copper a year.
Trafigura arranged a $600 million loan for Chemaf in 2022 to finance the development of Mutoshi – which could become one of the world’s largest cobalt mines – and upgrade the Etoile operation. Chemaf said previously that it had about $690 million of debt as of September, including around $510 million drawn down from the loan arranged by Trafigura.
Norin is a subsidiary of Chinese state-owned arms manufacturer Norinco Group, which already operates two Congolese mining projects, which last year produced almost 90,000 tons of copper.
--With assistance from Winnie Zhu.
©2024 Bloomberg L.P.
