Bloomberg reported that the DRC’s state-owned mining company, Gécamines, has proposed the acquisition of Chemaf’s Etoile and Mutoshi Cu-Co mining assets in the DRC.

Reuters also reported that the DRC government has “offered” Mutoshi to US officials for consideration by US investors; however, the scope of interest that is on offer is not clear.

This is reportedly driven by a recently signed minerals marketing partnership with the US Development Finance Corporation (UFC) for US$553M to upgrade the Lobito Corridor.

Chemaf has actively been looking for a buyer since 2023, when cobalt prices declined by nearly 50% and its key project lender, Trafigura, began to pull away from supporting the project.

Gécamines’ proposal includes a maximum purchase price of US$1M and would presumably assume most, if not all, of Chemaf’s debt and liabilities, as well as operational control of the project. Gécamines would then sell the mining assets to another buyer.

Should Gécamines' proposal be accepted, it would gain a 5% free-carry in the project and could acquire a stake of up to 20%. It is unclear whether Gécamines already has an acquiror lined up and would effectively be acting as an intermediary in Chemaf’s sale process.

Bloomberg states that five other offers are already on the table, even without Gécamines’ involvement.

The Etoile mine has been in production for over a decade, supplying crude cobalt hydroxide to China and previously to India.

The Mutoshi project is historically an ASM site; in 2018, Chemaf’s original plan was to “formalise” the operation, building a US$450M Cu-Co refinery and partnering with COMIAKOL as an organised, artisanal cooperative.

Mutoshi was originally envisaged to produce ~16ktpy of cobalt hydroxide, which would have added over 10% to the DRC’s cobalt production.

Trafigura committed US$600M in project lending in 2022; however, sentiment in the sector quickly fell away in 2023 as cobalt prices declined.

A number of players involved in the sales process, including the proposal by Gécamines, have indicated that the target market for these tonnes would be the USA.

However, the USA does not currently have processing capacity for crude cobalt hydroxide.

It would likely be the DRC government’s preference to build domestic refining capacity alongside this project; alternatively, the project’s cobalt marketing strategy could involve swapping cobalt “units” from the project for metal or refined chemicals from other projects to import into the USA.