Congolese state-owned commodity trading and mining company Gecamines has signed a production-sharing agreement with China-based Hongkong Excellen Mining Investment for the Kingamyambo and Kilamusembo copper and cobalt projects.
The Chinese firm will make a payment of a $40m to the state miner as signing bonus by the end of this year, reported Reuters.
This is the first production-sharing deal for Gecamines and is expected to guarantee a “significant” share of annual production from the two deposits irrespective of the “financial results of the project”.
Congo is Africa’s top copper producer, and is a leading miner of cobalt, the demand for which is increasing due to its use in electric car batteries.
China is currently the largest consumer of industrial metals in the world to power its industrial growth.
According to Gecamines, its joint ventures with major miners such as Glencore and China Molybdenum have not produced significant profits, and in response the company is shifting to production-sharing agreements, a practice common in the oil sector.
In a presentation, Gecamines economic adviser Stephane Cormier was quoted by the news agency as saying: “Production-sharing agreements align the interests of the two partners because the risk now weighs more on the investor than on Gecamines.”
The deposits at Kingamyambo and Kilamusembo are estimated to contain more one million tonnes of copper and 100,000t of cobalt.
In the 1980s, Gecamines’s annual production was close to 500,000t of copper. Since then it has fallen into heavy debt and last year, its production stood at less than 16,000t.
International watchdogs such as Carter Center and Global Witness alleged that the state-owned miner’s revenues, a figure measured in hundreds of millions of dollars, have gone missing in the recent years, a charge that was refuted by Gecamines.