Cobalt: CMOC increases stake in Tenke

China Molybdenum (CMOC) has agreed to increase its stake in Tenke Fungurume Mining (TFM).  For US$1.14Bn, CMOC will acquire BHR Newwood DRC, a holding company set up by Chinese private-equity firm BHR to buy a 24% stake in TFM in 2017. Subject to the deal’s completion, CMOC will have an 80% stake in TFM, with DRC state-owned enterprise Gécamines holding 20%.

Roskill view:

Until Q4 2016, TFM was a joint venture between Freeport-McMoRan Copper and Gold (56%), Lundin Mining (24%), and Gécamines (20%). Freeport-McMoRan and Lundin shares were held through Bermuda-based TF Holdings (in which the companies had 70% and 30% stakes respectively).  In November 2016, Freeport-McMoRan completed the indirect sale of its 70% interest in TF Holdings to China Molybdenum (CMOC) for US$2.65Bn. The same week, Lundin Mining announced its intention to sell its share to BHR Partners for US$1.14Bn.

The move sees yet more control of DRC copper and cobalt assets move into Chinese hands. Huayou Cobalt, Jiayuan Cobalt, Jinchuan, & the Sicomines consortium led by China Railway are amongst those to have major assets in the Congo. Several near-term projects are also being developed by Chinese firms, and each could bring 5-10kt of cobalt in hydroxide to the market. Some are mine developments, some are retreatment plants and others are processing facilities that will utilise third-party and artisanal feed. Wanbao is developing Pumpi; CNMC is developing Deziwa; Pengxin is developing Shituru; Huayou is developing the MIKAS retreatment plant; and Zijin Mining is targeting cobalt at COMMUS.

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To discuss the cobalt market with Roskill, contact Jack Bedder: jack@roskill.com or Ying Lu ying@roskill.com