China Molybdenum (China Moly) is set to increase its stake in the Tenke Fungurume copper mine in Democratic Republic of Congo (DRC) to 80% through a $1.14bn acquisition of a holding company called BHR Newwood DRC.
The holding company was established by private equity firm BHR to acquire a stake of 24% in the Tenke Fungurume copper mine in 2017 from Lundin Mining for $1.14bn.
BHR was helped by China Moly during the transaction in return of having the right to acquire the private equity firm’s stake in the copper mine at a pre-agreed price if it left the project.
The Chinese company expects the proposed deal, which will be subject to certain approvals and conditions, to boost its control and supervision over daily management and the mining operation of the Tenke Fungurume Mining Complex. It also believes that the acquisition will improve its profitability and risk-resisting capability.
China Moly is already a majority owner in the copper mine with a current stake of 56%, which it had acquired for $2.65bn in May 2016 from US mining company Freeport McMoRan for $2.65bn.
At the time of its transaction with Freeport McMoRan, China Moly revealed the mine to have proven and probable mineral reserves of 3.8 million tons of contained copper and 0.5 million tons of contained cobalt, as of 31 December 2015. The company said that these support a reserve life of around 25 years.
Further, China Moly then said that the mine’s measured and indicated resources of 13.1 million tons of contained copper and 1.3 million tons of contained cobalt, and inferred resources of 11.6 million tons of contained copper and 1.3 million tons of contained cobalt represent substantial upside potential.
The deposits of the mining project are contained within two concessions with a combined area of more than 1,500km2 within Katanga Province, in the south eastern part of DRC. The copper mine is located nearly 177km northwest of Lubumbashi.
The Tenke Fungurume copper mine produced its first copper cathode in March 2009 and, by September 2009, the plant was working at planned capacity. In the third quarter of 2009, commissioning of the cobalt plant and the sulphuric acid plant was done.
DRC’s state mining company Gecamines owns the remaining 20% stake in the Tenke Fungurume copper mine, which hosts one of the largest known copper and cobalt resources in the world.