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A court in the Democratic Republic of Congo has betrayed the Chinese owner of one of the world’s largest copper and cobalt mines; this is a big victory for the government of Congo, which is trying to become a bigger player in the global clean energy revolution.
The decision, which dismissed the mine’s Chinese leadership for at least six months, stems from a dispute over the billions of dollars the Congolese government says it owes its Chinese owner, China Molybdenum.
Backed by Chinese government funding, the company purchased the Tenke Fungurume mine. from an Arizona-based mining company in 2016. The mine is prominently featured in the Chinese government’s effort to dominate major supply chains for minerals and metals needed to manufacture batteries for electric vehicles.
Cobalt is essential for electric vehicles as it expands the battery range. It is currently trading at a three-year high.
New York Times reported in November Workers at the mine have complained about a dramatic decline in worker safety under Chinese ownership, including allegations that workers were attacked and bribed to cover up the accidents, after safety investigators expressed their concerns. The company disputed these allegations, arguing that they were part of a wider effort to discredit it.
Congolese president Felix Tshisekedi set up a commission last year to investigate allegations that Chinese Molybdenum may have deceived the Congo government over royalty payments from the mine. The legal action by the Lubumbashi Commercial Court on Monday came after the country’s state-owned mining operation requested the dismissal of the mine’s Chinese management.
court orderReviewed by The Times, it leaves a third-party executive in charge of the mine for at least six months while auditors consider the allegations against the company. The state mining agency known as Gécamines claims that China Molybdenum has failed to declare reserves of hundreds of thousands of tons of copper and cobalt buried at the site, depriving the agency of the important annual payments required when new reserves are found and verified.
During the review period, Gécamines will hold a 20 percent stake in the mine, the world’s second-largest source of cobalt, in 2020. Congo last year produced 70 percent from the cobalt of the earth.
President Tshisekedi’s office declined to comment on the decision on Monday. China Molybdenum did not respond to a request for comment, but denied that it had hidden its reserves in the past or incurred any additional copyright debt.
Congo has a history of threatening legal action against foreign mining companies; In some cases, threats were resolved when companies paid government officials, a process that some mining industry executives described as concussion.
In this case, both Gécamines and managers at the mine told The Times that the allegations against Chinese Molybdenum were based on legitimate concerns about its operations and a belief that the company was improperly withholding information.
On Monday, the court appointed Sage Ngoie, a Congolese engineer who until recently was the project manager at the mine, as the new interim mine manager.
Dr. Ngoie worked for Tenke for two years, overseeing waste disposal and other key engineering tasks, and was recently appointed to a new management role. In a phone call, he said he was not ready to explain the changes it could make to the mine, one of Congo’s largest employers, with more than 7,000 employees and contractors.
According to the decision, the court ruled that Dr. He assigned Ngoie “the task of reconciling two partners on different issues”, including “access to technical information and determining the parties’ rights over mining reserves”. It also empowered him to make decisions regarding mining operations and the sale of copper and cobalt. Currently, most of the cobalt in the mine is exported to China.
Congolese government officials are scrutinizing contracts signed with Chinese-backed mining companies more broadly after complaints about failure to deliver on promises made to Congo, a country struggling to regain its economic base after a devastating civil war and years of corrupt leadership. As of 2020, Chinese-backed companies owned or held a financial stake in 15 of Congo’s 19 cobalt-producing mines.
Mr Tshisekedi said too much profits from the nation’s metals and minerals – increasingly in demand as the world deprives itself of fossil fuels – do not benefit Congolese.
US officials have separately issued alarms that China could control the cobalt supply chain and increase battery prices; This is a prospect that haunts automakers who have pledged to move their fleets away from the combustion engine in the coming years.
“China has a kind of chokehold on its supply chain,” said Tiffin Caverly, vice president of the United States Export-Import Bank, who held a session last week on renewable energy and metals needed for military applications. “Unfortunately, I’ll say I don’t have an answer for how you broke the supply chain advantage China has built. Other than saying it is, it’s definitely a problem.”
Biden administration officials are looking for ways to strengthen ties with Congo and gain access to critical resources like cobalt. In February, a delegation of White House officials flew to the capital, Kinshasa, to meet with Mr. Tshisekedi and other senior officials. The US government supports a review of mining contracts in Congo as part of its effort to eradicate corruption.
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