Shares in CMOC Group have surged after the Chinese mining company and its Congolese partner struck a deal to resume sales from one of the world’s biggest copper and cobalt mines.
The resolution will unlock a stockpile of cobalt and copper worth up to $2bn at current prices, which has been building up in the Democratic Republic of Congo since last July.
Tenke Fungurume, the world’s second-largest cobalt mine owned by China’s CMOC, has been stockpiling metals after a royalties dispute with state-owned partner Gécamines blocked exports.
According to a filing on the Hong Kong stock exchange, CMOC said a “consensus” had been reached on the royalties issue, without providing details on the settlement.
The breakthrough could put further pressure on the price of cobalt, which has fallen more than 50 per cent over the past 12 months owing to sluggish demand for electric vehicles in China.
The Tenke Fungurume mine typically produces as much as 20,000 tonnes of copper and 1,500 tonnes of cobalt each month, and has generated a stockpile equivalent to about nine months of production because of the dispute. At today’s LME prices that would be worth $2.1bn, according to calculations by the FT, although the actual price realised is likely to be lower than that.
CMOC’s share price jumped by the daily limit of 10 per cent in Shanghai.
“This is the result of candid communication and friendly consultations between the two parties, and a ‘win-win’ after taking into consideration of the short-term interests and long-term development of the relationship between both parties based on the history of the project,” the Chinese company said.
CMOC added that the sides agreed to “jointly expand co-operation in industries including the new energy industry” and make “greater contributions to the friendly co-operation between China and the DRC”.
The end of CMOC’s impasse comes as China tightens its grip on the supply of cobalt and other critical minerals needed to produce electric vehicles.
The US has led efforts to cut the west’s reliance on China’s control of the clean tech supply chain that is seen as critical to long-term economic growth and national security in the world’s biggest economies.
In an interview with the Financial Times late last month Nicolas Kazadi, the Democratic Republic of Congo’s finance minister, signalled optimism that the dispute would soon be resolved following discussions at the “highest level” during a recent visit to Kinshasa by senior Chinese foreign ministry officials.