US intervenes in sale of Congo mine to Chinese arms group

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The United States intervened in the sale of a Congolese copper mine to a Chinese arms maker to prevent Beijing from further increasing its control over critical minerals, according to people familiar with the matter.

U.S. officials have encouraged Democratic Republic of Congo's state-owned mining company Gcamines to reconsider its sale, announced last week, of Trafigura-backed Chemaf Resources to Norin Mining, a subsidiary of Chinese state-owned defense company Norinco, the sources said.

The move is part of Washington's push to improve access to metals for companies with close ties to the United States, amid growing competition between the West and China for control of minerals needed for clean energy infrastructure. The U.S. State Department did not respond to a request for comment.

Chemaf leases the permit for its flagship Mutoshi project to Gcamines. The state-owned mining company said it should have been informed of the deal in advance and that no direct or indirect change of control could take place without its approval.

Gcamines said in a statement Monday that its board vetoed the deal after learning about it through media reports.

Chemaf said it had informed Gcamines before the sale was announced and had not received any correspondence from the state-owned mining operator. It added that it had already received approval from the Congolese mines minister.

The company has conducted an extensive international sales process and has received significant inquiries from several US groups. However, none of these US inquiries have resulted in a transaction that can be executed, it said in a statement to the Financial Times.

Gcamines has a long history of intervening in the sale of mining assets to block deals, renegotiate its rights or extract payments. The new president, Guy Robert Lukama, was appointed in 2023 with a mandate to turn around the troubled entity and has said he will review unfavourable contracts and joint ventures.

A person close to Gcamines, who requested anonymity, said the company was acting to protect its contractual rights and assess the best options for developing the project.

Under Lukama's leadership, Gcamines wants to market more of the ore produced on its concessions and exploit more areas itself.

Norinco describes itself on its website as the main supplier of weapons and equipment to the Chinese military and a leader in international cooperation in China's defense industry.

Norinco already owns two other copper-cobalt mines in southeastern Congo. Norinco did not respond to a request for comment.

The assets that Norinco hopes to acquire from Chemaf include two producing mines, Mutoshi and Etoile, and several other mining licenses that could contain additional resources.

Cobalt and copper are essential metals for military equipment because they are used in superalloys for fighter jets, as well as in cables and munitions.

A 2020 UN report found that Norinco was among Chinese companies that supplied arms to Congo at least eight times between 2015 and 2019. The US Treasury has banned US companies or individuals from owning Norinco stock since 2020.

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Trafigura provided a $600 million loan to Chemaf in 2022 in exchange for the right to market its cobalt hydroxide and remains the company's largest creditor.

The facility was intended to help Chemaf complete the construction of a fully mechanised mine at Mutoshi and expand a processing plant at Etoile, but rising costs and falling cobalt prices have delayed the company's plans.

Under the terms of the agreement with Norinco, Trafigura would be fully reimbursed.

Trafigura reached out to the U.S. government and others to ask for help finding buyers after it announced the sale process last year, according to three people familiar with the matter. Trafigura declined to comment.

Washington has tried to pitch potential bidders, including KoBold Metals. But the startup backed by venture capital firm Bill Gates pulled out after considering a bid. KoBold Metals declined to comment.

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