More information is coming to light about Tuesday’s surprise announcement that the court case in the DR Congo against Chinese mining major China Molybdenum has been suspended.
The Chinese company, also known as CMOC or China Moly, published an unusually detailed statement on Wednesday that laid out its position regarding the legal case filed last December by the DRC’s state-owned miner Gécamines.
For the first time, CMOC publicly agreed to increase royalty payments to Gécamines for cobalt and copper extraction at the massive Tenke Fungurume mine (TFM). Gécamines alleged that the Chinese company had underreported the quantity of reserves at TFM and thus was not paying enough in royalties.
Now, it appears that CMOC is willing to negotiate a new royalty rate but it will only do so with an independent, international third party arbitrator.
By any measure, this is a major breakthrough in a saga that had threatened to undermine the company’s hold on one of the world’s largest cobalt reserves — a precious metal that is a key ingredient in the production of batteries for electric vehicles and other electronics.
Last month, a commercial court in the southern city of Lubumbashi issued an order to suspend CMOC’s operation of TFM and appoint a temporary administrator from Gécamines to run the operation. Even though that order was never actually implemented, it nonetheless prompted the company to take action.
CEO Sun Ruiwen flew back to Kinshasa in early March to negotiate directly with Prime Minister Sama Lukonde and now, three weeks later, it appears that effort paid off.
Key Highlights From CMOC’s Press Release on the Suspended Court Case With Gécamines
- INCREASED ROYALTY PAYMENTS: “Since the second half of 2021, as commodity prices rise, there have been some talks in the DRC around mining policies in the hope of driving economic development, creating more jobs, and rebalancing interests. In response, CMOC has been in close communications with the DRC on the matter of additional royalty payment by TFM.”
- DETERIORATING RELATIONS WITH GECAMINES: “Although the court order issued by the Lubumbashi court on March 8 was not executed, misunderstandings have been caused and the peaceful and friendly environment was impacted, drawing great attention from the DRC Government.”
- THIRD-PARTY ARBITRATION: “TFM’s additional royalty payment “shall be resolved fairly under the leadership of government ministries in accordance with international practice by engaging an internationally recognized third-party to conduct an assessment to protect the interests of investors and achieve win-win cooperation.”
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