Tensions between China and the Democratic Republic of Congo (DRC) have escalated amid allegations that a Chinese mining company has been deliberately understating the discovery of new reserves of cobalt and copper in order to reduce its royalty payments to the state-owned mining firm.
Against this backdrop, a temporary administrator appointed by a Congolese court—Sage Ngoie Mbayo—has instructed the China Molybdenum (CMOC) to suspend marketing and exports from the Tenke Fungurume mine (TFM). The mine is jointly owned by the Chinese firm, which has a majority stake of 80%, and the DRC’s state mining company Gécamines.
In two letters dated June 29 and July 1 accessed by Reuters, Ngoie ordered CMOC to share all the information regarding its marketing and exports since January 1 within 24 hours and subsequently ordered the suspension of all marketing and exports by the Chinese company.
Gécamines Deputy Chief Executive Officer Leon Mwine Kabiena accused the CMOC of “stealing” and cheating,” alleging that they were “liars,” “pillagers,” “bandits,” and “criminals.”
Meanwhile, the CMOC has denied its engagement in any such tactics, with Chinese Ambassador Zhu Jing insisting “the two companies to maintain a dialogue... without using the apparatus of the state or resorting to brutal methods.” He stressed that the government shall use “all means” to “defend our legitimate rights and interests.”
On June 9, Ngoie declared that he had taken control of the Tenke Fungurume mine, seizing its bank accounts, claiming in a video that “at this time, TFM is run by me.” The Chinese firm’s spokesperson, Vincent Zhou, however, denied any such change in the management, noting that “production and operations are running as usual.”
In a landmark ruling, a court in the #DRC🇨🇩 has temporarily removed mining giant #China🇨🇳 Molybdenum from control of one of the world's largest #cobalt producers, the Tenke Fungurume mine, as potentially billions of dollars owed to the Congo are reviewed. https://t.co/1NY9EjJceS
— Dr. J. Peter Pham 🇺🇲 (@DrJPPham) March 1, 2022
This followed a court verdict in February that ruled in favour of the DRC appointing Ngoie as an interim administrator in order to“reconcile the two partners on the points of divergence, namely access to technical information.” He was entrusted with making decisions regarding the mining operations and sale of copper and cobalt. However, tensions resurged after the CMOC refused him access to the mine by deploying soldiers to block his entry at the premises.
Ngoie lambasted the CMOC for this obstruction, warning that “if they continue with this game, things will get harder,” which ultimately led him to blocking marketing and exports by the company.
The dispute dates back to August 2021, when the CMOC invested $2.5 billion in expanding operations at the mine, which raised speculations about whether the Chinese firm was under-reporting its reserves. To this end, Gécamines claims that the company owes it about $7.5billion in royalties and interest payments that it argues have been illegally withheld.
In fact, Gécamines Deputy CEO Mwine has even threatened “drastic actions,” including the revocation of the CMOC’s ownership of the mine and an effective dissolution of their partnership, stating that “if we determine that it’s not working, even in marriages, there are always divorces.” He even pointed to the fact that a commercial agreement between the two firms had not yet been renewed, which makes the continued exports “technically illegal.”
Moreover, Congolese President Félix Tshisekedi had even appointed a Commission to investigate into the dispute and reassess the reserves and resources at the TFM.
Zhou has expressed concerns over the developments, saying that “there are persons who ignore the basic facts and act against the established agreement, trying to sabotage the amicable environment of friendly talks by telling lies, making troubles, and attacking partners.” He further revealed that the two companies are “continuing to move forward” on talks about royalty payments.
The Tenke Fungurume Mine holds one of the world's largest known copper & cobalt resources. The deposits are located within two concessions totaling over 1,500 square kilometres (580 sq mi) within Katanga Province, in the south eastern region of the DRC Congo. Used in electronics pic.twitter.com/QJqGGCcJSK
— Africa Updates (@africaupdates) September 14, 2018
The TMF is one of the world’s largest copper and cobalt mines; in 2021, it produced 18,501 tonnes of cobalt and 209,120 tonnes of copper. In fact, the DRC is the world’s largest supplier of the two elements, with the Tenke mine alone accounting for 14% of world cobalt production.
The present tussle over the Tenke mine is part of a global shift towards clean energy, wherein cobalt and copper are key elements of the batteries for electric vehicles, and are currently trading at three-year highs. The DRC hopes to become a leading player in the global supply chain and has repeatedly threatened legal action against foreign mining companies.
Likewise, China harbours ambitions of establishing a strong foothold in the supply of these crucial minerals and metals. In fact, by 2020, China had acquired stakes in 15 of the DRC’s 19 cobalt mines.
The CMOC had even pledged to invest $1.8 billion in developing phase one of the Kisanfu copper and cobalt project in the country. The project is set to be commissioned by early 2023, with the company aiming “to expand the resource and develop it into another long-life world class asset” for China.
The quest for control over and access to the east African nation’s mineral resources has even attracted the United States, with White House officials visiting Kinshasa earlier this year to discuss mining contracts with President Tshisekedi.
In this regard, Tiffin Caverly, the Vice President at the US Export-Import Bank, expressed concerns over the Chinese “stranglehold on the supply chain” for metals and minerals, alleging that its dominance can cause distortions in battery prices, thus endangering auto manufacturers’ ability to move away from combustion engines to clean technology.
The US has also raised alarm over the horrendous working conditions for miners under Chinese ownership, highlighting claims by safety inspectors that workers had been assaulted for raising concerns and were offered bribes to cover up accidents. These allegations have been rubbished by the CMOC as an attempt to “discredit” it.