Norinco Proposes Stake Hike In Chemaf Mining Deal

China North Industries (Norinco), a Chinese conglomerate, is trying to revive its stalled $1.4bn (10.15bn yuan) bid for the copper and cobalt assets of Chemaf by proposing to increase the the Democratic Republic of the Congo (DRC) Government’s stake in the assets, reported Reuters, citing two sources familiar with the matter.

The deal, initially offered in June, has faced obstacles after Gecamines, Congo’s state-owned mining company, submitted its own competing bid for Chemaf’s assets.

The situation was further complicated by US opposition, as officials in Washington are lobbying against China’s growing dominance over critical minerals in the central African Copperbelt, a key region for global copper and cobalt supply.

To overcome the impasse, Norinco has suggested raising the DRC Government’s interest in the Mutoshi and Etoile mines from 5% to as much as 15%, without additional costs, pending negotiations.

This offer by Norinco includes a share of the metal produced, proportional to the government’s stake, which it can then sell. Norinco owns the Comica and Lamikal mines in the DRC.

Chemaf, which has a partnership with commodities trader Trafigura, presented the offer to the Congolese Government on Norinco’s behalf last month.

While the discussions are ongoing, Norinco has expressed its willingness to adjust the future shareholding structure, provided it maintains a majority interest.

Norinco’s offer for Chemaf’s assets stands at around $900m (Dh3.31bn) including debt settlement, with an additional pledge of $500m to complete expansion projects at the Etoile and Mutoshi mines.

Despite the bid, Gecamines, which holds the lease to the Mutoshi mine, has not approved the deal.

Gecamines chair Robert Lukama told Reuters in November that the offer of around $1m for the assets is viable and has not consented to a deal with Norinco.

Chemaf has accused Gecamines of obstructing the sale process and failing to make a competitive bid.

In a letter to Gecamines, Chemaf outlined that any potential buyer must address approximately $920m in debt and commit to the $500m mine development, as Norinco has proposed.

Chemaf’s creditors including Trafigura, First Bank and Trade & Development Bank have been awaiting repayment for 18 months and are eager for a resolution.

Norinco’s bid would provide around $920m immediately to Chemaf’s lenders and other stakeholders. Gecamines has indicated a lack of current funding to purchase and develop the assets.