(Bloomberg) — A shareholder dispute over one of the world’s biggest copper and cobalt mines is heating up in the Democratic Republic of Congo, after state miner Gecamines threatened to block exports or even take the mine away from its partner, China Molybdenum Co.

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Congo’s Gecamines, which owns 20% of the Tenke Fungurume mine’s holding company, has accused CMOC of manipulating the project’s finances and says it owes as much as $5 billion in payments.

The disagreement has extended to who is actually running the mine: a Congolese court appointed a temporary administrator to manage the holding company while the shareholders sort out their differences, but CMOC insisted nothing has changed. The administrator, Sage Ngoie Mbayo, says he now controls the company’s bank accounts but was blocked from entering the mine site last week by Congolese soldiers.

Things were set to come to a head Thursday at the first meeting between the shareholders and Ngoie at Tenke Fungurume Mining SA’s offices in the Congolese mining hub of Lubumbashi. But while Gecamines’ top two executives were there, CMOC representatives didn’t attend.

Gecamines Chief Executive Officer Bester-Hilaire Ntambwe Ngoy Kabongo and his deputy, Leon Mwine Kabiena, said they are prepared to take more drastic action, including effectively revoking CMOC’s ownership of the project by dissolving the partnership.

Armed Guards

“If it continues like this, we are going to ask for the dissolution,” the CEO said. The two executives became increasingly agitated during the meeting, which lasted two hours in a boardroom surrounded by otherwise-empty company offices, while armed guards stood outside.

Story continues

“What CMOC is doing now is stealing, it’s cheating, it’s covering-up,” Mwine said, adding that they were “liars,” “pillagers,” “bandits,” and “criminals.”

CMOC did not immediately answer questions on the meeting or Gecamines’ statements. The company previously said the mine is operating as usual without any change in management, and production is beating targets. In its 2021 annual report, CMOC said communication with Gecamines was “complex and dynamic” and they planned to engage an independent third party to verify disagreements over reserve estimates “and resolve the differences through fair and impartial negotiation.”

Any disruption to operations or exports from Tenke Fungurume could send ripples through global metals markets. Congo is one of the world’s top producers of copper and by far the largest supplier of the key battery mineral cobalt. Tenke alone accounts for about 14% of world cobalt production, according to calculations by Bloomberg using figures from Darton Commodities Ltd., and the ore body is expected to last for decades.

CMOC bought control of the project from Phoenix-based Freeport McMoRan Inc. about five years ago in a deal that ultimately cost the company more than $3 billion. The mine produced 209,120 tons of copper and 18,501 tons of cobalt in 2021, according to CMOC.

The dispute between the current partners began around last August, when CMOC announced it would invest another $2.5 billion to more than double production at the mine. Gecamines officials questioned how it could achieve the huge increase without raising its reserve estimates, which would trigger royalty payments of $12 per ton, Ntambwe said.

Within weeks of CMOC’s announcement, Congo President Felix Tshisekedi formed a commission to examine the partnership and Gecamines soon followed with a lawsuit at the Lubumbashi commercial court.

In February, the court decided in Gecamines’ favor, ordering that Tenke Fungurume Mining SA should be run for at least six months by Ngoie, who has a PhD in geohydrology and previously worked for a number of mines in Congo including TFM.

Broken Down

Congo’s government put the appointment on hold while the presidential commission tried to negotiate with CMOC, but talks have broken down again, according to Mwine, who is also coordinator of the commission.

Ngoie said he is neither on the side of CMOC nor of Gecamines, and his concern was the health of the company.

“I am the church in the middle of the village,” he said. In addition to TFM’s bank accounts, Ngoie said he soon will control its exports. “They don’t go by plane, they only go by road. And one way or another, I’ll control that,” he said. “I have the power to do that.”

Mwine says Gecamines has a right as a shareholder to block the project’s exports.

“Tactical arrangements can also be made at road level so that no TFM production can go out,” he said. “We have a lot of options on the table and if they continue with this game, things will get harder.”

(Updates with $5 billion figure in second paragraph.)

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