By Felix Njini
JOHANNESBURG (Reuters) – China North Industries Corp, known as Norinco, has offered to adjust its offer to buy copper and cobalt assets owned by Chemaf SA by raising the Congo government’s stake to smooth the path to a deal, two sources familiar with the matter told Reuters.
The $1.4 billion bid made by the Chinese defence and industrial giant in June stalled after Congo state miner Gecamines submitted its own unsolicited bid for the Chemaf assets, deepening a standoff that has been complicated by U.S. officials lobbying against China’s grip on the mineral-rich central African Copperbelt.
Norinco has now proposed that the Democratic Republic of the Congo increase its interest in Chemaf’s Mutoshi and Etoile mines to as much as 15% from 5% currently – at no additional cost – subject to negotiations, said the sources, who asked to remain anonymous.
Chemaf, a long-time partner of commodities trader Trafigura, made the offer on Norinco’s behalf to Congo’s government last month and it has been under discussion since then, the sources added.
Norinco informed the Congolese government it is flexible on the future shareholding structure as long as it keeps a majority interest, the sources said.
The Chinese company did not respond to emailed questions.
The sources said Norinco also offered Congo a share of the metal produced by Chemaf proportionate to its shareholding, which the government could sell, in a deal similar to one Gecamines has with China’s CMOC.
Norinco already owns the Comica and Lamikal mines in Congo.
It offered about $900 million for Chemaf’s assets, including settling debts, and pledged an additional $500 million to complete the Etoile and Mutoshi expansion projects, the sources said.
Chemaf declined to comment.
GECAMINES DIGS IN
Gecamines owns the lease to Chemaf’s Mutoshi mine and Norinco’s bid can’t proceed without its approval.
Chair Robert Lukama told Reuters in November that Gecamines offer of about $1 million for the assets was viable and he wouldn’t approve a deal with Norinco.
In a letter to Gecamines, seen by Reuters, Chemaf last week accused the state miner of deliberately frustrating the sale process while failing to make a competitive bid itself.
Chemaf’s letter, sent in response to Gecamines’ demand for access to the miner’s books, said any buyer must pay off about $920 million in debt and commit the $500 million to developing the two mines, as Norinco has offered.
Lukama declined to comment further.
Chemaf’s creditors, including Trafigura, First Bank and Trade & Development Bank, have not been repaid for 18 months and want the deal concluded, the letter said, adding that Norinco’s offer would make about $920 million immediately available to Chemaf’s lenders, trade creditors and other stakeholders.
Trafigura declined to comment.
Chemaf also said Gecamines had indicated that it currently does not have the funding in place to pay for and develop the assets.
Congo’s Mines Minister Kizito Pakabomba did not respond to a request for comment. Earlier in February he told Reuters that the government was working to finalise the acquisition.
(Reporting by Felix Njini in Johannesburg; editing by Emelia Sithole-Matarise, Kirsten Donovan)
