FAST NEWS: Beijing Approves CMOC’s Large-Scale African Mining Project
The latest: China Molybdenum Co. Ltd. (CMOC) (3993.HK; 603993.SH) announced Tuesday that the company’s plan to develop a $2.51 billion TFM copper and cobalt mixed mine in the Democratic Republic of Congo (DRC), has been filed with the National Development and Reform Commission and obtained approval from the Ministry of Commerce.
Looking up: Following the important green light from Beijing, the large-scale project is expected to add approximately 200,000 tons of copper and 17,000 tons of cobalt to CMOC’s annual production capacity next year, which will further enhance its profitability.
Take Note: The majority of the company’s copper and cobalt products are currently sourced from other mines in the DRC. That means that upon the new project’s completion, CMOC will rely even more heavily on this potentially unstable central African country for its production capacity.
Digging Deeper: Although its name includes the word “molybdenum,” CMOC’s main business is cobalt and copper mining. Revenue from its DRC operation reached 6.06 billion yuan ($894 million) last year, accounting for over half of its total for mineral exploration and processing. But the company’s development in the country has not been smooth. In early March, it was accused of evading millions of dollars in royalty payments by underreporting its reserves, and was ordered by a local court to suspend mining at its copper and cobalt mine for six months. Reflecting growing global competition for cobalt resources, which are a key component of new energy batteries, U.S. President Joe Biden sent a delegation to the DRC this year to meet with local officials. The U.S. deputy national security advisor Daleep Singh has also castigated Chinese companies for lack of transparency in their DRC mining contracts.
Market Reaction: CMOC opened up slightly on Tuesday and extended its gains to 3.2% to close at HK$3.60 at the midday break. But the stock still trades close to its 52-week low.
Translation by Jony Ho
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