Congo Copper Deal With China May Draw $2 Billion of Investmentby
Negotiations with China Nonferrous are ongoing, Gecamines says
Project will have initial capacity of 80,000 tons of copper
Gecamines, the Democratic Republic of Congo’s state-owned mining company, said China Nonferrous Metal Mining Group may invest as much as $2 billion to develop its most prospective copper asset.
The Congolese miner in June described the agreement, through which CNMC will finance, build and operate a copper-processing facility at the Deziwa concession before transferring full ownership back to the state-owned miner, as a “new type of partnership” designed to increase revenue for the state, but has yet to provide full details of the arrangement.
“It’s not a partnership, it’s a financing agreement, a loan to be reimbursed,” Kandolo Mafuta, Gecamines’ director of partnerships, told a mining conference Aug. 11 in the capital, Kinshasa. “Total investment could be $2 billion,” he said in an interview at the meeting.
In June, Gecamines said that CNMC would finance the construction of the plant with an initial capacity for 80,000 metric tons of copper a year, in return for a 51 percent stake in the project. CNMC will then be reimbursed through an off-take agreement over a fixed period that had not yet been agreed before full ownership is transferred back, Gecamines said at the time. A decision on a second phase of the project, which would increase output to 200,000 tons a year, would be taken at a later date, the company said.
Kandolo said he could still not confirm how long it may take to repay the investment, or when Gecamines would retake full ownership of the project.
Gecamines, which currently has $1.58 billion of debt, borrowed $196 million to acquire Deziwa in January 2013, stating that it would provide the reserves needed to reintroduce the company as a major producer. The company produced 18,826 tons of copper last year, compared with peak output of 500,000 in the 1980s. It says Deziwa has the potential to produce 5 million tons of copper, placing it among Congo’s biggest metal deposits.
Local advocacy groups including Patriotes Katangais Aile Radicale have questioned Gecamines’ plan to now give CNMC a 51 percent share in its “flagship” project, even on a build-operate-transfer basis, and called for more information about the arrangement.
The Atlanta-based Carter Center and London-headquartered Global Witness have also called on Gecamines to release details of the deal and to publish an initial agreement signed with CNMC in January, in line with Congolese state requirements.
The company says that talks are continuing and that a January accord with CNMC was designed only to frame negotiations and doesn’t represent a binding contract that needs to published.