Congo Government Will Investigate, Tax Freeport Mine Sale

  • Freeport sold Tenke Fugurume copper mine for $2.65 billion
  • Mines Minister Kabwelulu questions value of the transaction

The Democratic Republic of Congo’s government plans to investigate Freeport-McMoRan Inc.’s sale of a copper mine for $2.65 billion and tax the transaction, Mines Minister Martin Kabwelulu said.

Freeport, based in Phoenix, Arizona, announced May 9 it sold its indirect 56 percent stake in the Tenke Fugurume mine in the central African country, which also produces cobalt, to China Molybdenum Co. Gecamines, the state-owned Congolese miner, said May 10 it wasn’t informed about the sale.

“Freeport has made a foreign sale of a Congolese asset of great value,” Kabwelulu said. “There must be a tax to pay here. We will push the tax authority to claim it.”

Gecamines owns 20 percent of Tenke Fungurume, alongside Freeport and Toronto-based Lundin Mining Corp. China Molybdenum will acquire Freeport’s ownership via a 70 percent interest in Bermuda-based TF Holdings Ltd. Lundin, which owns the other 30 percent of TF Holdings, has 90 days to match the offer for Freeport’s stake.

‘One Hour’

Although the transaction involved a transfer of equity in a foreign holding company, Gecamines, as a shareholder in the mine should still have been informed of the sale, Kabwelulu said in a text message.

“There seems to have been a desire to hide the real value of the transaction,” he said. “$2.65 billion, is it the right price?”

Freeport representatives informed Gecamines and Lundin of the sale “within
one hour after the agreement as entered into,” Eric Kinneberg, a company spokesman, said by e-mail, without commenting on the minister’s transaction value allegation. Confidentiality and securities exchange regulations prevented U.S.-listed Freeport from disclosing the transaction to Gecamines or Lundin any earlier, he said.

Gecamines has opposed similar transactions in the past. In 2012, it almost stopped the acquisition of Anvil Mining NL by China’s Minmetals Resources Ltd. The deal proceeded after they reached an agreement that included Anvil paying $55 million to Gecamines.

Before it's here, it's on the Bloomberg Terminal.