Trafigura-led creditors take 70% loss on Congo miner’s debt

Creditors led by Trafigura Group have taken a haircut of about 70% on the debt of a troubled Congolese copper-cobalt miner at the heart of nascent US efforts to vie with China on critical minerals, according to one of the company’s new owners.

Indian miner Lloyds Metals and Energy Ltd. — which teamed up with a firm headed by US military veterans to buy Chemaf SA earlier this year — estimates a cash settlement of the entire debt at $250 million or less based on “executed” agreements, according to a disclosure to the Bombay Stock Exchange. That’s down from borrowings of $804 million when Lloyds and now 51%-owner Virtus Minerals Inc. completed the transaction, it said.

While Lloyds Metals didn’t mention Trafigura, the bulk of Chemaf’s debt stems from a $600 million loan that the commodity trader arranged and syndicated in 2022 to help finance projects in Congo, which subsequently stalled. Trafigura declined to comment.

The acquisition by Virtus was the first deal by an American firm in the Democratic Republic of Congo after Washington and Kinshasa signed a strategic partnership in December. The bilateral pact gives US investors privileged access to some mining and infrastructure projects in the mineral-rich central African nation, where Chinese companies currently dominate output of copper and cobalt.

Congo is the world’s top source of battery material cobalt and second-biggest copper producer.

The former owners of Chemaf, which had run into financial difficulties while developing what will be one of the world’s largest cobalt mines, put the company up for sale in 2023 and initially agreed a deal with a unit of Chinese arms manufacturer Norinco Group. That transaction was abandoned after Congo withheld the necessary approvals amid opposition from US officials.

The Trump administration has prioritized shoring up supplies of critical minerals and reducing US reliance on China. Boosting the presence of American investors in Congo’s mining industry is an important part of those ambitions.

A consortium involving the US International Development Finance Corp. and Orion Resource Partners is working to close a transaction to buy 40% of Glencore Plc’s controlling stakes in two large Congolese copper-cobalt mines.

Orion CEO Oskar Lewnowski told Bloomberg Television last month that a potential deal to provide financing to Chemaf “is still possible.”

While the price to purchase Chemaf’s shares was $30 million, the buyers are tasked with funding the completion of the firm’s flagship Mutoshi mine and the expansion of the firm’s existing Etoile operations. They also assumed responsibility for Chemaf’s substantial liabilities.

Lloyds Metals didn’t immediately respond to an email requesting further comment and Virtus declined to comment. 

Lloyds, which produces iron ore in its home country and is also seeking to restart a copper-gold mine in Papua New Guinea, expects Chemaf’s plants to start producing refined copper next year, according to the disclosure.

(By William Clowes)