A court in the Democratic Republic of Congo has suspended the Chinese firm from operating its Tenke Fungureme cobalt mine after the government had accused it of understating the reserves in the mining fields. The company, China Molybdenum is now barred for at least six months and investigations continue while a temporary administrator has been appointed by the government to run it. Gecamines, the state mining firm has long been in a dispute with the China Molybdenum in which it says the country is owed billion dollars in unpaid returns. The company however denies any wrongdoing, although it is expected that it will appeal the ruling that suspends it from operating the cobalt mine.
The dispute started in August 2021 when Congo’s government formed a commission to reassess the resources and reserves of copper and cobalt in its Tenke Fungureme mines. The company accounted for 182,600 tonnes of copper and 15,400 tonnes of cobalt in 2020, the last year for which complete data is available. DR Congo has the largest reserves of cobalt in the world, with 3.6 million tonnes yet unmined.
In August 2021, China Molybdenum announced the injection of a $2.5 billion investment in its DR Congo operations. In a filing to the Shanghai Stock Exchange, China Moly said the US$2.5 billion investment will go toward building three ore production lines. It is meant to boost the average annual copper output at the mine by 200,000 tons and increase cobalt output by 17,000 tons.
The recent ruling comes after several analysts and observers have decried the alleged partiality in the allocation of contracts to Chinese companies. More than 70% of Congo’s mining sector is controlled by Chinese investors. The government has said that it is currently reviewing a $6 billion “infrastructure-for-minerals” deal from 2008.
Cobalt is an essential component in making batteries for electric vehicles.
