Congo Drops Objection to $3.8 Billion Freeport, Lundin Sales
By Tom Wilson and Danielle Bochove, Bloomberg News
The Congolese government has dropped objections to Freeport-McMoRan Inc. and Lundin Mining Corp.’s $3.8 billion combined sales of one of the country’s biggest mines to Chinese companies, bringing an end to an eight-month dispute.
Minister of Mines Martin Kabwelulu said by text messages that he had written to all parties acknowledging agreements reached by state-owned miner Gecamines to settle objections to the sales and indicating the state had no further opposition.
New terms between the parties will allow Freeport and Lundin Mining to exit the copper and cobalt project in the Democratic Republic of Congo without legal challenge, according to two people familiar with the matter. In May, Freeport agreed to sell its 56 percent stake in the Tenke Fungurume Mining project to China Molybdenum Co. for $2.65 billion, and in November Toronto-based Lundin said it was selling its 24 percent stake to Chinese private-equity firm BHR Partners for at least $1.14 billion.
Gecamines, which owns the other 20 percent of Tenke, opened arbitration in Paris in October to block Phoenix-based Freeport’s sale to CMOC. Gecamines had demanded, among other things, that any change to the indirect ownership of the Tenke Fungurume mine be blocked unless authorized by the state miner.
China Molybdenum’s shares advanced 1 percent by the close in Hong Kong, as the broader index gained 0.6 percent.
Gecamines has now dropped the case, the people said. The parties have reached an agreement that will provide some financial compensation to Gecamines as well as the right to more consultation and control should the future owners of the asset decide to sell it, according to one of the people.
Gecamines has confirmed in writing that it has no further objections to the sale of the project, according to a second person who had seen correspondence, dated Jan. 6, between the parties involved. The amount of compensation to be paid to Gecamines wasn’t made clear.
Gecamines, CMOC and Lundin Mining declined to comment, while a Freeport spokesman wasn’t immediately available on Monday, a U.S. holiday. BHR Partners didn’t immediately respond to a request for comment.
Gecamines has opposed similar transactions in the past. In 2012, it almost stopped the acquisition of Anvil Mining NL by China’s Minmetals Resources Ltd. The deal proceeded after they reached an agreement that included Anvil paying $55 million to Gecamines.
Freeport, which plunged 71 percent in 2015 as commodity prices collapsed, had been seeking to offload assets and reduce a debt load that stood at about $20 billion at the end of that year. Tenke gives state-backed BHR and China Molybdenum greater exposure to copper, a metal used in wiring and pipes, and a foothold in cobalt, one of the specialty metals used in the expanding rechargeable-batteries industry.