Kinshasa/London — An attempt by the Democratic Republic of the Congo’s Gecamines to profit from the boom in battery metals has backfired, leaving the state-owned miner facing two international court actions and halting cobalt production at a key mine.
Gecamines blocked its 16-year partner GTL’s access to the cobalt site in the southeastern Congolese town of Lubumbashi in March to make way for a new investor, as prices for the metal soared. The attempt to switch one partner for the other has resulted in both parties taking legal action against the state-owned company for breach of contract.
Jersey-registered GTL, a joint venture in which closely held Groupe Forrest International has a 70% stake and Gecamines holds 30%, is suing Gecamines in the commercial court in Brussels for damages, according to two people familiar with the matter. The court schedule means no more cobalt is likely to be produced at the site until at least 2020 if there is not a settlement, said the people, who asked not to be identified because they are not authorised to speak publicly about the matter. The court declined to comment.
Separately, British Virgin Islands-registered Shamrock Global said it petitioned the International Court of Arbitration in Paris on November 2 to rule whether Gecamines breached a July 2016 agreement to grant Shamrock access to the same site after GTL’s contract ended, CEO James McCormack said in a statement on November 22.
Global Supply
Congo supplies about two thirds of the world’s cobalt, of which as much as 5,000 tonnes a year, or 4% of global supply, was produced by GTL. Traditionally used to harden steel, cobalt’s ability to conduct electricity has made it an essential part of the rechargeable batteries needed to power electric vehicles. The price of the metal has risen 86% tin 2017 to $61,000 a tonne on the London Metal Exchange.
Glencore, the world’s largest cobalt miner, has bought GTL’s output since 2015.
GTL has processed mine waste, known as slag or tailings, at the Lubumbashi site since 2001. The project was a lucrative source of revenue for Gecamines. The state miner received as much as $65m a year in payments for the raw material, in addition to its 30% share of total profit, GTL’s majority shareholder, Groupe Forrest International, said in April.
Still, Gecamines blocked GTL’s access to the site on March 23, forcing the company to switch off the furnace five months later. Between March and July, GTL twice failed to obtain a temporary decision from the Belgian courts to restore access to the mine waste and save its supply of raw material for the furnace.
Differing Interpretations
Groupe Forrest spokesman Henry de Harenne confirmed the case is continuing, but declined to comment on the details of the dispute.
Gecamines said in an e-mailed response to questions that the dispute with GTL centres around "the interpretation and execution of contractual agreements concluded in 1997," noting that Belgian courts have already "ruled in favour of Gecamines" twice in 2017.
GTL contests Shamrock’s claim to the tailings and says its contract grants it preemption rights to the parts of the site it was not exploiting. Shamrock’s own arbitration further complicates the prospects of future production at the site.
A ruling in Shamrock’s favour by the Paris arbitration court will "have the effect of ordering Gecamines to cease and desist from the conclusion of any and all contract negotiations and or settlement agreements with any third parties in respect to the Lubumbashi slag dump, pending the outcome of the main arbitration hearing between Shamrock and Gecamines," McCormack said.
The court heard the case on November 24 and will decide whether to issue an emergency arbitration order on Monday, he said. Shamrock will continue with the main arbitration hearing if the emergency order is not granted, McCormack said.
"Gecamines considers that the agreements concluded between Gecamines and Shamrock have not entered into force" because "preceding conditions" are yet to be satisfied, the state-owned miner said.
Bloomberg
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