Overhauling Mining Joint Ventures in World’s Prime Cobalt Source
The Democratic Republic of Congo’s state miner, Gecamines, is expanding its efforts to secure higher stakes in its copper and cobalt joint ventures. Gecamines aims to negotiate increased ownership in these ventures to enhance its influence in managing major mines. Additionally, the miner is utilizing its existing shareholding in mines to negotiate off-take contracts for trading copper and cobalt independently. Gecamines seeks more representation of local executives on joint venture boards to have a greater say in asset management decisions. The move comes amid a global scramble for critical minerals, particularly those essential for the green energy transition.
Gecamines Chairman, Guy Robert Lukama, highlighted the desire to rectify past mistakes that led to unfavorable agreements, aiming to capitalize on the increased demand for minerals. The state miner, which was once a major producer, is looking to regain control over its assets and ensure more equitable terms in joint ventures.
The plans involve potential renegotiations of existing agreements, addressing terms deemed unfavorable by Gecamines. This strategy aligns with the global demand for minerals crucial for renewable energy technologies. China, a significant player in Congo’s mining sector, has been instrumental in driving cobalt production, a key component in electric vehicle batteries.
Gecamines intends to strengthen its position by securing more favorable terms, pushing for accountability and transparency in joint ventures. The miner questions some partners’ financial decisions and aims to address the level of debt affecting returns to the state miner.
The push for greater control and renegotiation of terms is facilitated by changes in the mining code in 2018, empowering Gecamines to seek reviews of existing contracts and increasing the minimum state participation threshold. This move reflects the broader trend in resource-rich countries seeking more favorable terms in mining agreements to maximize benefits and ensure sustainable development.
