US company Freeport-McMoRan said today it was selling control in the Tenke Fungurume copper mine in DR Congo to China Molybdenum, giving the Chinese company a strong foothold in the country's rich copper and cobalt reserves.
Freeport-McMoRan will offload its 70 percent stake in TF Holdings, which in turn has 80 percent of Tenke Fungurume Mining SA, for USD 2.6 billion, giving China Molybdenum an effective 56 percent stake in the Congolese mine.
In addition to the cash payment, the US company said it could also receive USD 120 million depending on developments in the price of copper and cobalt in 2018 and 2019.
The mine lies in the southeast of the Democratic Republic of Congo, the central African country which boasts about one third of the world's known cobalt reserves, and 10 percent of its copper reserves.
Its mineral wealth has long been a source of conflict in the troubled country.
World demand for cobalt is driven by its use in mobile phones and, increasingly, electric car batteries.
China Molybdenum said the deal would add "a scarce, world-class producing copper-cobalt mine with substantial upside" to its portfolio.
This "strategic position in the central African copperbelt" and put it in a good position to benefit from growing demand for cobalt, "particularly from electric vehicles".
Freeport-McMoRan also said it had agreed to negotiate exclusively with China Molybdenum to sell its interests in Freeport Cobalt, including the Kokkola Cobalt Refinery in Finland, for USD 100 million and the Kisanfu Exploration project in the Democratic Republic of Congo for USD 50 million.
"This transaction is another significant step to strengthen our balance sheet and enhance value for shareholders," Freeport-McMoRan's chief executive Richard Adkerson said in a statement.
He said the company had announced over USD 4 billion in asset sales since the start of the year as the company seeks to reduce its decbt.
Freeport-McMoRan said it did not expect the sale to lead to changes in operations at Tenke, which employs 3,400 full time operational workers and 4,200 contractors.
At the end of last year Tenke had 7.2 billion pounds (3.3 billion kilos) of recoverable reserves of copper and 874 million pounds of cobalt.
