Title: The mining company Chemaf seeks a buyer in the face of falling metal prices
Introduction :
Prices of metals essential to the energy transition, such as cobalt, have seen a significant decline this year, putting several mining companies in a difficult situation. This is particularly the case of Chemaf, a mining company linked to Trafigura and present in the Democratic Republic of Congo for several decades. In order to finalize the expansion of two copper and cobalt mines in the country, Chemaf is actively looking for a buyer and launched a call for tenders last September.
A delicate situation for Chemaf:
Chemaf, a mining company partner of raw materials giant Trafigura, is facing financial difficulties. Indeed, the company needs $300 million to complete the expansion of two copper and cobalt mines in the Democratic Republic of Congo. Having already completed 85% of the work, Chemaf launched a call for tenders in September in order to receive buyout proposals. The company is open to a full sale or joint venture, and is targeting a valuation around $1 billion.
Challenges related to the sale of Chemaf:
The potential sale of Chemaf comes against a global backdrop of inflation and falling cobalt prices. Despite its essential role in the energy transition, the price of cobalt has fallen by 17% this year. However, demand for this metal is expected to increase in the coming years. Thus, the challenge for Chemaf is to find a buyer capable of financing the remaining work and coping with variations in cobalt prices on the market.
The importance of mine expansion:
The expansion planned by Chemaf at the Étoile and Mutoshi mines would significantly increase copper and cobalt production in the Democratic Republic of Congo. With an estimated production capacity of 75,000 tonnes of copper and 25,000 tonnes of cobalt, the DRC would thus strengthen its position as the world’s leading producer of cobalt and third world producer of copper. This represents a major opportunity for the country, but also a financial challenge for Chemaf in the current economic context.
Conclusion :
Chemaf’s search for a buyer demonstrates the difficulties mining companies face in the face of falling metal prices. Despite this situation, the expansion of copper and cobalt mines in the Democratic Republic of Congo remains essential to meet the growing demand for these metals as part of the energy transition. The sale of Chemaf therefore represents an opportunity for an investor wishing to get involved in this strategic sector, while meeting the economic challenges of the metals market.