Congo, Chinese Miner Agree on Royalties, Freeing Up More Than $1 Billion in Battery Metals — Update

By Yusuf Khan

Chinese mining giant CMOC Group Co. and Congo have come to an agreement on mining royalties, resolving a monthslong dispute between the two parties that had blocked the passage of more than $1 billion worth of battery metals to global markets.

In a filing on the Hong Kong Stock Exchange, CMOC said it and La Generale des Carrieres et des Mines--the Congo state mining company also known as Gecamines--had reached consensus on the issue of mining royalties at the Tenke Fungurume Mine in the south of the country, operated by CMOC and home to one of the largest copper-cobalt deposits in the world.

As a result, thousands of tons of cobalt and copper that had been blocked by Gecamines from leaving Congo will now be available to be shipped.

CMOC had chosen to continue mining during the dispute, meaning some 12,000 metric tons of cobalt and 120,000 tons of copper were being held, according to people familiar with the matter--equivalent to $1.2 billion, based on prices assessed by Argus Media and the London Metal Exchange.

CMOC described the agreement as "win-win," taking both long- and short-term interests of both parties and the project.

"The smooth progress of the project will further release the production capacity of TFM copper-cobalt mine, which is conducive to further improving the company's profitability," CMOC said.

CMOC's stock rose 10% following the announcement.

"The unfolding of this commercial dispute shows that every operator in the DRC needs to carefully manage its relationship with local partners," said David Brocas, managing partner at commodity consulting firm Voltaire Minerals Partners and former head of cobalt trading at Glencore PLC.

Cobalt prices have dropped substantially since the end of 2022, along with other battery metals, on weak electric-vehicle demand in China.

Argus Media's assessment for cobalt hydroxide is down 42% to $18,188.14 a metric ton since Nov. 1.

"It will be interesting to observe how the release into the market of such a large stockpile will affect cobalt hydroxide prices in an already weak market environment," Mr. Brocas said.

Gecamines declined to comment on the matter.

Write to Yusuf Khan at yusuf.khan@wsj.com

(END) Dow Jones Newswires

April 19, 2023 09:41 ET (13:41 GMT)

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