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Chinese company removed from the post of operator of cobalt mine in Congo

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Chinese company removed from the post of operator of cobalt mine in Congo

A court in the Democratic Republic of the Congo has sidelined the Chinese owner of one of the world’s largest copper and cobalt mines, a major victory for the Congolese government as it seeks to become a major player in the global clean energy revolution.

The ruling, which removes Chinese leadership of the mine for at least six months, stems from a dispute over the billions of dollars in payments the Congolese government says it owes to the Chinese owner, China Molybdenum.

Backed by Chinese government funding, the company purchased the Tenke Fungurum mine from an Arizona-based mining company in 2016. The mine is prominently involved in the Chinese government’s efforts to dominate major supply chains for minerals and metals needed in the production of batteries for electric vehicles.

Cobalt is essential for electric vehicles because it extends the battery range. It is now trading at a three-year high.

The New York Times reported in November that mine workers had complained about a dramatic drop in the safety of workers under Chinese ownership, including claims from safety inspectors that workers had been attacked after raising concerns. And bribes were offered to cover accidents. The company disputed those claims, suggesting they were part of a wider effort to discredit it.

The President of the Congo, Felix Tshisekedi, last year named a commission to investigate allegations that China may have defrauded the Congolese government from molybdenum mine royalty payments. Legal action was taken on Monday by the Commercial Court of Lubumbashi, after the country’s state-owned mining enterprise sought to remove Chinese management of the mine.

The court’s decision, reviewed by The Times, spares the third-party administrator in charge of the mine for at least six months as auditors evaluate the allegations against the company. The state mining enterprise, known as Geckamines, claims that China failed to declare hundreds of thousands of tons of copper and cobalt reserves buried at the molybdenum site, giving the agency the critical needed when new reserves are found and verified. Annual payment was denied.

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During the review period, Gécamines will retain its 20 percent stake in the mine, which was the world’s second largest source of cobalt in 2020. Congo produced 70 percent of the world’s cobalt last year.

President Tshisekedi’s office declined to comment on the decision on Monday. China Molybdenum did not respond to a request for comment, but has denied in the past that it hid reserves or owed any additional royalties.

Congo has a history of threatening legal action against foreign mining companies; In some instances the threats were resolved when companies paid government officials, a process that some mining industry executives described as a setback.

In this case, executives from both Gécamines and the mine have told The Times that the claims against China Molybdenum are based on legitimate concerns about its operation and the belief that the company is improperly concealing information.

The court on Monday named Congolese engineer Sage Ngoi, who had recently worked as a project manager at the mine, as the new temporary mine administrator.

Dr Ngoi worked at Tenke overseeing waste disposal and other major engineering works and was recently appointed to a new management role. In a telephone interview, he said he was unwilling to describe the changes at the mine, which is one of the largest employers in Congo, with more than 7,000 workers and contractors.

According to the verdict, the court tasked Dr. Ngoi to “reconcile the two partners on a variety of issues”, including “determination of the parties’ rights to access technical information and mining reserves”. It also empowered him to make decisions relating to the operation of the mine and the sale of its copper and cobalt. At present, most of the cobalt from the mine is exported to China.

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Congolese government officials are conducting extensive investigations into contracts signed with Chinese-backed mining companies after complaints of unfulfilled promises to Congo, a nation trying to regain its economic status after years of disastrous civil war and corrupt leadership. Has been doing. As of 2020, Chinese-backed companies had ownership or financial stake in 15 of Congo’s 19 cobalt-producing mines.

Mr. Tsisekedi has said that much of the gains from the country’s metals and minerals – increased demand as the world rids itself of fossil fuels – do not benefit the Congolese people.

US officials have separately raised the alarm that China may be controlling the supply chain for cobalt and raising battery prices, a prospect that has irked auto makers who have decided to shift fleets away from combustion engines in the coming years. has promised.

“China is kind of holding onto the supply chain,” said Tiffin Caverli, vice president of the Export-Import Bank of the United States, which held hearings last week about metals needed for renewable energy and military applications. “Unfortunately, I will say that I don’t have the answer for how you break down the supply chain advantage China-made. Other than saying that, it’s an issue altogether.”

Officials in the Biden administration are looking for ways to strengthen ties with the Congo and gain access to vital resources such as cobalt. In February, a delegation of White House officials traveled to the capital, Kinshasa, for a meeting with Tshisekedi and other top officials. The US government is backing a review of mining contracts in the Congo as part of an effort to crack down on corruption.

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