Gecamines warns Lundin on withdrawal

GECAMINES, the Democratic Republic of Congo’s stateowned miner, warned that any decision by Lundin Mining to withdraw from the Tenke Fungurume copper mine could scupper Freeport McMoRan’s proposed sale of its stake in the project.

By exiting at the same time as Freeport and transferring full ownership of the project to new parties without securing Gecamines’ approval, Lundin and Freeport would further violate the miner’s rights, said chairman Albert Yuma. Gecamines must be permitted to match any offers for Lundin’s stake, or it could block the deal. Investigate Freeport announced in May it sold its indirect 56percent stake in Tenke Fungurume to China Molybdenum for $2.65 billion (R36bn). Gecamines, which owns 20 percent of the mine, said it had not been informed about the transaction and would investigate the deal in order to “assert its rights”.

As Freeport’s partner in the project, Lundin has an option that expires on Thursday to match China Molybdenum’s offer. Lundin plans to exit the venture and has held talks with China Molybdenum and other companies about offloading its 24 percent stake, said sources familiar with the matter.

“Any simultaneous withdrawal by Lundin and Freeport in favour of CMOC or other buyers will be problematic and would in fact actually reinforce the suspicion of fraud to Gecamines’ and the state’s rights,” Yuma said. The transaction “will remain in a deadlock, unless Lundin and Freeport respect Gecamines’ and the state’s rights”, he said.

Freeport said China Molybdenum was acquiring ownership via a 70 percent interest in TF Holdings, not the local operating entity in which Gecamines was a shareholder, and therefore it is not subject to the state-owned miner’s approval or pre-emption.