Mining firm China Molybdenum (China Moly) has agreed to acquire holding company BHR Newwood DRC Holdings for $1.14bn, a transaction which will allow it to raise its stake in the Tenke Fungurume copper and cobalt mine in the Democratic Republic of Congo (DRC).
Following the acquisition of the holding company, China Moly, which was already the majority owner of Tenke Fungurume, will have an 80% stake in the mine.
BHR Newwood DRC Holdings was set up by private equity firm BHR to acquire a 24% interest in Tenke from Canadian miner Lundin for $1.14bn in 2017.
This acquisition will enable China Moly to gain greater control of one of the world’s largest cobalt deposits.
Demand for cobalt is expected to increase in the future due to its use in batteries used in electric vehicles.
In a filing to the Shanghai Stock Exchange, China Moly stated that the acquisition will boost the company’s profitability and ability to control risks.
DRC generates 60% of the world’s cobalt, but the country could face a period of political uncertainty due to an election held later this month.
In 2016, China Moly acquired a 54% interest in the cobalt mine for $2.65bn from US copper miner Freeport-McMoran, which offloaded its stake to cut down its $20bn debt.
“This acquisition will enable China Moly to gain greater control of one of the world’s largest cobalt deposits.”
As per an agreement with China Moly signed before the acquisition, Lundin holds an exclusive right to purchase back the shares from BHR.
Congo’s state-owned miner Gecamines holds the remainder of the stake in the asset.
Headquartered in Luoyang, China Moly’s largest shareholders are Cathay Fortune Corp, an investment vehicle operated by Chinese billionaire Yu Yong, and the local Luoyang state-owned mining company.SOURCE