The Democratic Republic of Congo’s state mining company received $100 million as part of a settlement to drop its objections to the sale of the country’s biggest copper mine to Chinese buyers, according to people with knowledge of the agreement.
The cash payment was made last month after state-owned Gecamines agreed to abandon legal cases to block the sale of Freeport McMoRan Inc. and Lundin Mining Corp.’s interests in the Tenke Fungurume mine, the people said, asking not be identified as terms of the arrangement aren’t public. China Molybdenum Co. and Chinese private-equity firm BHR Partners bought the stakes for a combined $3.8 billion.
The settlement marks the end of a nine-month dispute between Freeport, Lundin, the Chinese buyers and Gecamines over whether the sales, which were a transfer of ownership in an offshore holding company, should have been subject to preemption or approval by the state-owned miner. Gecamines owns 20 percent of local operating unit Tenke Fungurume Mining.
Gecamines has received other one-off payments in the past to approve similar deals and from the sale of its own assets, but has rarely published details of the transactions. Freeport said last month it paid Gecamines $33 million as its share in the settlement. The contributions of the other parties and the total sum paid have not been made public.
Lundin Disclosure
Lundin will disclose terms once the sale of its stake to BHR closes, which is expected in the first half of the year, the Toronto-based company said Monday in an e-mailed response to questions. China Moly declined to comment, while BHR Partners didn’t immediately respond to an e-mailed request for comment. Freeport declined to comment on the full amount and referred to its $33 million share of the settlement announced in a Jan. 25 quarterly earnings report.
The payment is a windfall for Gecamines. The company had debts of $1.58 billion as of June, while its copper production dropped 15 percent last year to 14,260 metric tons despite plans since 2010 to boost output to more than 100,000 tons and reestablish the company as an important independent producer. At its peak in 1986, Gecamines produced 476,000 tons of copper.
In addition to the cash payment, Tenke Fungurume Mining will also provide a $30 million loan to Gecamines, once the local court action it initiated in December ceases, the people said.
Congolese Mines Minister Martin Kabwelulu, who in January confirmed an agreement had been reached, referred questions relating to the details of the settlement to Gecamines, when contacted Feb. 20 by phone. Gecamines declined to comment.
To contact the reporter on this story: Tom Wilson in Kinshasa at twilson128@bloomberg.net.
To contact the editors responsible for this story: Antony Sguazzin at asguazzin@bloomberg.net, James Attwood, Paul Richardson
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