Image Source : China Visual
BEIJING, April 19 (TMTPOST) —— CMOC Group reached an agreement on the rights and interests of TFM with the Democratice Republic of Congo (DRC)"s state mining company Gecamines on Tuesday, according to its announcement made on Wednesday.
However, the company didn"t disclose the consideration agreed or the duration of the payment.
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CMOC Group has been negotiating with the government of the DRC to increase its reserves since the announcement on production expansion in the third quarter of 2021.
A year and a half after that, CMOC Group TFM copper and cobalt project in the Democratic Republic of Congo, Africa, finally reached an agreement with the local government on increasing the reserve of royalties.
TFM copper and cobalt mine exports are expected to resume this week. Exports of TFM products have been restricted since the third quarter of 2022.
TFM mine is one of the largest and highest grade copper and cobalt minerals in the world, with a mining area of more than 1500 square kilometers. CMOC Group acquired the TFM copper-cobalt mine from Freeport-McMoRan of the US in May 2016 and holds an 80 per cent interest.
CMOC Group was trading at about 6.96 yuan per share, up 9.95% as of 11 a.m. on Wednesday. CMOC Group announced an additional investment of $2.51 billion to build three production lines in August 2021, namely mixed ore production line with 3.5 million tons a year, oxidized ore production line with 3.3 million tons a year and mixed ore production line with 5.6 million tons a year. The project is expected to be completed and put into operation this year, when TFM will more than double its output, adding about 200,000 tons of copper and 17,000 tons of cobalt annually.
CMOC Group disclosed that CMOC Group was required to pay to Gecamines, a minority shareholder of TFM, to increase its reserves in accordance with the mining agreement and shareholder agreement signed from 2005 to 2010 in its annual report for 2022. Since the announcement of the expansion in the third quarter of 2021, the management team of CMOC Group and its subsidiary DRC TFM copper and cobalt business has engaged in ongoing meetings with DRC parties to discuss the mineral reserves of TFM to be increased by and the related additional royalties to be paid to Gecamines based on these reserves.
In the annual report, CMOC Group admitted that, combined with the current local market practice in the DRC and the negotiation between the two parties, it is expected that the agreed royalties may be higher than the provisions of the mining agreement and shareholder agreement.
Gecamines charges a royalty of $12 a tonne for additional storage, but the two sides are in dispute over the reserve of copper, which is a 30-fold difference between the DRC"s definition of "copper ore" and the industry practice of copper concentrate. The government was asking for more than $7.5 billion as royalties at one point. Therefore, it has put extreme pressure on enterprises in order to achieve this goal, including but not limited to threatening to seize bank accounts, suspending the export of minerals produced by TFM, and appointing temporary administrators to take over by the court.
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