China's Norinco Sweetens Bid for Congo Copper Mines as Deal Stalls

As the deal between China's Norinco and Chemaf SA for the acquisition of copper and cobalt mines in the Democratic Republic of Congo (DRC) stalls, Norinco has sweetened its offer to address the government's concerns and smooth the path to a deal. According to two sources familiar with the matter, Norinco has proposed increasing Congo's stake in Chemaf's Mutoshi and Etoile mines from 5% to as much as 15%, at no additional cost, subject to negotiations. This move is part of Norinco's $1.4 billion bid for Chemaf's assets, which includes settling debts and committing an additional $500 million to complete the Etoile and Mutoshi expansion projects.

Norinco's proposed increase in Congo's stake addresses the government's concerns about maintaining control over its natural resources and ensures that the local government benefits more directly from the exploitation of its mineral wealth. By offering to increase Congo's share, Norinco demonstrates a willingness to accommodate the government's demands, potentially leading to a more favorable outcome for all parties involved.

In addition to increasing Congo's stake, Norinco has also offered to give the Congolese government a share of the metal produced by Chemaf proportionate to its shareholding, which the government could sell. This offer is similar to the deal that Gecamines has with China's CMOC, where Gecamines receives a share of the metal produced from the Tenke Fungurume Mining (TFM) operation. This arrangement provides Congo with a source of revenue that can be used to fund infrastructure projects and other development initiatives, while also giving the government a greater say in the management and operation of the mines.

Norinco's flexibility on the future shareholding structure, as reported by Reuters, involves offering to increase Congo's interest in Chemaf's mines while keeping a majority interest for itself. This arrangement balances the interests of both Congo and Norinco by addressing the government's concerns about maintaining control over its natural resources, providing additional revenue, and ensuring Norinco's majority interest. By maintaining a significant stake in the mines, Norinco can continue investing in and developing the projects, which benefits both Norinco and Congo in the long run.

The potential long-term consequences of this arrangement include strengthening the partnership between Congo and Norinco, encouraging responsible mining practices, promoting transparency and accountability, and the risk of future disputes if key issues cannot be resolved through negotiation. Clear communication and negotiation will be essential to prevent such disputes from arising and ensure a successful and mutually beneficial partnership between the two parties.

In conclusion, Norinco's sweetened bid for Chemaf's copper and cobalt mines in the DRC addresses the government's concerns about maintaining control over its natural resources and provides additional revenue for the local government. By increasing Congo's stake and offering a share of the metal produced, Norinco demonstrates a willingness to accommodate the government's demands and fosters a more cooperative relationship between the two parties. The potential long-term consequences of this arrangement include strengthening the partnership between Congo and Norinco, encouraging responsible mining practices, promoting transparency and accountability, and the risk of future disputes if key issues cannot be resolved through negotiation.