Bloomberg News | July 9, 2022 |
Tenke Fungurume operation. (Image courtesy of Freeport-McMoRan Copper & Gold).
An intensifying feud between shareholders of the giant Tenke Fungurume mine in the Democratic Republic of Congo may lead a court-appointed administrator to block its exports of copper and cobalt.
The administrator, Sage Ngoie Mbayo, began ordering the export suspension over the past week as he tries to resolve a dispute over royalty payments between CMOC Group Ltd. and state-owned miner Gecamines, according to four separate letters sent to a Congolese tax agency, and three export agents including a unit of France’s Bollore Group. The documents seen by Bloomberg were verified by Ngoie’s office, which said the suspension would take some time to take effect.
CMOC said Ngoie doesn’t have the authority to stop exports. Tenke “is always under the legitimate and effective control of the management team nominated by CMOC,” company spokesman Vincent Zhou said in an emailed response Friday. “The production and operations, including transportation and export, are normal.”
A prolonged suspension of Tenke’s cobalt exports could have a significant effect on the market for the mineral, which is a key ingredient in electric vehicle batteries. The mine accounted for about 14% of world cobalt production last year, according to calculations by Bloomberg using figures from Darton Commodities Ltd.
Gecamines, which owns 20% of the Tenke project, said China’s CMOC has been lying about its mineral reserves and owes the company $7.6 billion in royalties and interest. The state miner sued last year to have a temporary administrator appointed to run the company while the two partners worked out their differences. Ngoie took over Tenke last month with the blessing of Gecamines, but CMOC has blocked him from entering the mining site.
“No other person has the right to interfere with TFM’s operations,” Zhou said. “Letters from the so-called provisional administrator, without the approval of TFM’s shareholders’ meeting and board of directors, are not binding on TFM and do not represent the will of TFM to external parties.”
The company said it reserved “the right to pursue legal liability against relevant persons.”
CMOC’s response to the threat to exports shows “the disdain, disregard and disrespect to which they hold both the DRC and our justice system,” Ngoie’s office said in a statement sent to Bloomberg Friday.
“Because the export system is a complex and intricate machine, it cannot be stopped with one button, however because CMOC continues with denial and mockery of our justice system, the entire world will very soon see a complete halt of TFM exports,” according to the statement.
Gecamines officials did not respond to messages requesting comment. Bollore said in an email Saturday that it received the temporary administrator’s missive and its position is “in line” with a letter sent Friday by Tenke’s counsel to Congo’s customs agency, which said that Ngoie was not the legal administrator as long as the court’s decision to appoint him was under appeal. The lawyer, Deo Bukayafwa of MBM Conseil, did not immediately respond to emails requesting comment outside of normal business hours.
Congolese civil society entered the fray Thursday, with a consortium of national and international organizations known as Congo is Not For Sale calling on CMOC to release all its mineral data and decrying what it called “a lack of transparency” around the project and its royalty calculations.
(Reporting by Michael J. Kavanagh).
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