Chinese industrial and defence giant China North Industries Corp (Norinco) has proposed a strategic review of its bid to buy Chemaf SA's copper and cobalt assets in the Democratic Republic of Congo (DRC). According to two sources close to the matter interviewed by Reuters, Norinco is seeking to break a deadlock by increasing the Congolese state's stake in the Mutoshi and Étoile mines from 5% to 15% at no extra cost, subject to negotiations.
Initially proposed in June for $1.4 billion, Norinco's bid was met with a counter-attack from Gécamines, the Congolese state-owned mining company, which submitted an unsolicited bid for the same assets. This tug-of-war, exacerbated by US pressure against Chinese influence in Central Africa's rich copper belt, delayed the deal. Norinco, which already owns the Comica and Lamikal mines in the DRC, has now shown flexibility by proposing an adjustable shareholding structure, provided it retains a majority stake.
According to the sources, the revised offer includes around $900 million for the acquisition of Chemaf's assets, including debt settlement, and a further $500 million to finalise expansion projects at the Étoile and Mutoshi mines. Norinco has also suggested that the Congolese government should receive a proportional share of the metal produced, similar to an agreement between Gécamines and the Chinese company CMOC. This share could be resold by the state, providing an additional source of revenue.
Chemaf, a long-standing partner of Swiss trader Trafigura, submitted this proposal to the Congolese government last month on behalf of Norinco. Discussions are ongoing, although neither Norinco nor Chemaf would comment officially.
However, the process still depends on the approval of Gécamines, which holds the lease on the Mutoshi mine. In November, its president, Robert Lukama, defended a rival offer of around $1 million, which he considered viable, while expressing his opposition to an agreement with Norinco. However, a recent letter from Chemaf, seen by Reuters, accuses Gécamines of deliberately blocking the sale by not offering a credible alternative. According to Chemaf, any buyer must not only repay a debt of $920 million, but also invest $500 million in developing the mines - commitments that Norinco is prepared to honour.
The situation is made all the more urgent by the fact that Chemaf's creditors, including Trafigura, First Bank and Trade & Development Bank, have been awaiting repayments for 18 months. Norinco's offer would immediately release $920 million to these and other creditors. Gécamines, on the other hand, has admitted that it does not have the necessary funds to finance the acquisition and development of the assets, according to Chemaf.
Mines Minister Kizito Pakabomba did not respond to enquiries, although he indicated in early February that the government was seeking to finalise an acquisition. This case illustrates the growing tensions surrounding the strategic resources of the DRC, the world's second largest producer of copper and a leader in cobalt, essential for electric batteries. The United States, anxious to limit China's hold in the region, is keeping a close eye on these negotiations, while Kinshasa is juggling between economic interests and sovereignty.
For Norinco, this tactical adjustment is designed to allay local misgivings while consolidating its presence in a key sector. It remains to be seen whether this new proposal will be enough to convince Gécamines and the Congolese government, or whether the impasse will persist, at the risk of further weakening Chemaf and its creditors.