The Democratic Republic of Congo’s Mines Ministry requested a June 3 meeting with Ivanhoe Mines Ltd. officials to discuss the sale of a stake in the Kamoa copper project to Zijin Mining Group Co.
Because there was no previous discussion between the shareholders of the Kamoa project, “the government of Congo, through the ministry of mines, opposes this transaction,” Valery Mukasa, the ministry’s chief of staff, said in an e-mailed statement Wednesday. Ivanhoe says it doesn’t need approval for the share sale and has been in touch with the appropriate government authorities.
The Mines Ministry wants a meeting “in order to find appropriate solutions,” Mukasa said.
Zijin announced on Tuesday it would acquire 49.5 percent of Ivanhoe’s Kamoa copper project in southwestern Congo for $412 million. The deal comes five years after the Chinese company was blocked from entering Congo. The first phase of Kamoa entails developing a 100,000 metric-ton copper mine at an estimated cost of $1.4 billion. A smelter will be constructed in a second phase in addition to other expansions that will take annual output of blister copper to 300,000 tons.
Congo’s government has a 5 percent stake in the project and should have been contacted about the sale through the portfolio or mines ministries, Mines Minister Martin Kabwelulu said in an interview on Wednesday. Kabwelulu said neither he nor Portfolio Minister Louise Munga Mesozi had authorized the deal. Munga Mesozi declined to comment when reached by phone Wednesday.
“This sale cannot take place without prior arrangement from the government,” Kabwelulu said by phone from Tokyo. “The government is open to discussing the prerequisites to a sale.”
Ivanhoe Chief Executive Officer Lars-Eric Johansson said no approval is required by the government because the state’s 5 percent shareholding “or a potentially larger future shareholding in the DRC company will not be affected.”
Ivanhoe previously offered to sell an additional 15 percent of the Kamoa project to the government at market rates.
“Ivanhoe Mines is continuing to engage with the DRC government and the ministry of mines about any questions or issues they may have,” Johansson said in an e-mailed response to questions Wednesday. “We are confident, based on previous experience and engagement, that any questions or issues the government may have will be resolved before the transaction is completed.”
Ivanhoe expects the sale to Zijin to close on or about July 31, following Chinese regulatory approval.
Moise Ekanga, who heads Congo’s Office for the Coordination and Oversight of the Sino-Congolese Program, was in meetings and couldn’t immediately respond to questions when reached by phone Wednesday. Ekanga’s office, which answers directly to President Joseph Kabila, handles Congo’s relationship with China and controls a $6.2 billion minerals-for-infrastructure contract between the two countries.
Zijin has an option to buy an additional 1 percent stake upon arranging project financing for 65 percent of Kamoa’s first phase of development. Should it exercise that option, Zijin will arrange project financing for subsequent development phases, according to a joint statement from the companies.