US-backed fund agrees to buy stake in Glencore’s DR Congo mines

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A US government-backed mining investment fund has agreed to buy a 40 per cent stake in Glencore’s copper and cobalt projects in the Democratic Republic of Congo, the first big investment in the country since Washington struck a minerals deal with Kinshasa in December.

Orion Critical Mineral Consortium and Glencore said on Tuesday they had reached a nonbinding agreement on the terms of the multibillion-dollar transaction, and were planning to collaborate on additional projects across the African copper belt.

The news came in the same week as senior DR Congo officials gather in Washington for a critical minerals ministerial meeting. The deal, if completed, would represent the largest US investment in the African nation since Freeport-McMoRan sold a controlling stake in its Congolese mines to Chinese miner CMOC in 2016.

US deputy secretary of state Christopher Landau said the proposed transaction “reflects the core objectives of the US-DRC Strategic Partnership Agreement” on minerals.

“We look forward to continued close engagement with the DRC government to advance this transaction in a manner that delivers benefits for both our peoples and sets a positive example for future US investment.”

The deal is the first for Orion CMC — a partnership between Orion Capital Partners, the US International Development Finance Corporation and Abu Dhabi-based sovereign wealth fund ADQ — since its launch late last year.

The assets comprise Mutanda Mining and Kamoto Copper Company, in which Glencore has respective 95 per cent and 70 per cent stakes. Orion CMC will acquire 40 per cent of Glencore’s holdings in the companies in a deal the companies said gave the two assets an implied total valuation of roughly $9bn.

Tuesday’s agreement comes as Glencore and rival Rio Tinto approach a key deadline this week in talks over a possible mega merger to create what would be the world’s largest miner.

Separate discussions over the future of Glencore’s DR Congo assets have been ongoing for more than a year.

But the country has risen up the geopolitical agenda as the race for resources has intensified.

Washington has also pushed for a US takeover of miner Chemaf, which operates in DR Congo and has been locked in a lengthy sales process, with Washington lobbying in favour of a consortium that includes Virtus Resources and Orion.

The planned deal with Glencore would give Orion the right to sell its share of the mines’ production, which it said would secure critical minerals “for the US and its partners”. The mines would continue to be managed by Glencore.

The US last year added copper to its critical minerals list. The widely used and highly conductive industrial metal has soared in price in recent months, hitting a series of record highs in the context of fears about supply disruption and future shortages.