Congo Miner Renegotiates ERG Joint Venture to Boost Revenue
(Bloomberg) -- Democratic Republic of Congo state mining company Gecamines said it renegotiated a joint venture with Eurasian Resources Group Sarl to boost its share of revenue from the project.
It’s the second time this year the company has remodeled agreements with other firms, after ending a dispute with Glencore Plc in June over one of Congo’s biggest copper and cobalt mines. Gecamines Chairman Albert Yuma has repeatedly criticized existing partnerships as too generous to foreign investors.
Gecamines boosted its stake in ERG subsidiary Boss Mining SPRL, a copper and cobalt producer, to 49 percent from 30 percent under the rearranged accord, the Lubumbashi-based company said in a statement on Monday. ERG also converted into equity more than $1.5 billion of intra-group loans granted to Boss Mining, it said.
The new agreement includes a “detailed business plan allowing for a close monitoring of the returns” such as dividends to shareholders including Gecamines and profit taxes to the state, the company said. It also provides for a $30 million payment to Gecamines and a re-evaluation of a signing bonus that Boss Mining paid for its deposits, which will now be calculated at $165 per metric ton of copper instead of $35.
Gecamines also said it’s ceased international arbitration against Boss Mining and its parent, without providing further details. ERG spokesman Andrey Belov didn’t answer two calls, a text message and an email seeking comment.
ERG has three other mines in Congo, including the Metalkol Roan Tailings Reclamation project, which recently resumed operations and is set to become one of the world’s largest cobalt producers.
Boss Mining last year produced about 37,000 tons of copper and more than 3,000 tons of cobalt. The company’s export revenue in the first nine months of 2018 was about $310 million, according to Mines Ministry data.
Congo accounts for two-thirds of global output of cobalt, used to make rechargeable batteries that power electric vehicles, and is expected to extend that share to three-quarters by 2021 as producers bring new projects on stream. The country is also Africa’s top copper producer.
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