Macro

Congo Halts 9 ERG Mine Subcontractors, Demands Local Control

Congo halts nine ERG subcontractors over non-compliance, aiming to enforce local control in cobalt and copper sectors.

By Mackenzie Crow

4/4, 06:01 EDT
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Key Takeaway

  • Congo suspends nine ERG subcontractors at major cobalt mines, demanding compliance with laws favoring Congolese-owned companies.
  • The suspension targets firms at Metalkol and Frontier projects but allows a transition period to minimize impact on cobalt and copper output.
  • ERG faces broader challenges in Congo, including government attempts to take over assets and accusations of environmental damage.

Regulatory Crackdown in Congo

The Democratic Republic of Congo has suspended operations of nine subcontracting companies at mines operated by Eurasian Resources Group (ERG), citing non-compliance with laws mandating Congolese national control. This move underscores the government's intent to ensure greater domestic benefits from its critical resources, including cobalt and copper, essential for the global energy transition. The sanctions, announced on March 14, remain in effect following discussions with ERG, highlighting ongoing tensions between the Central African nation and the Kazakhstan-backed mining giant.

ERG's Compliance Efforts

ERG has responded to the allegations by emphasizing its commitment to adhering to local laws and regulations, including those pertaining to local content and subcontracting. The company asserts that a substantial majority of its expenditure in Congo benefits Congolese suppliers and is actively working with the regulator to align its operations with local legal requirements. Despite the regulatory challenges, ERG maintains that its projects, including Metalkol and Frontier, which are significant sources of cobalt and copper respectively, will not see an impact on output due to a transition period for bringing in compliant companies.

Impact on Cobalt and Copper Production

The regulatory actions target firms involved with ERG’s key projects in Congo: Metalkol, a leading cobalt producer, and Frontier, a significant copper mine. These measures come amid broader government efforts to assert control over the mining sector, including attempts to take over some of ERG's assets and halting activity at a copper project due to environmental concerns. Despite these challenges, ERG plans an $800 million revamp of its Comide project, signaling continued investment in Congo's critical minerals sector.

Management Quotes

  • Miguel Kashal Katemb, director general of the Regulatory Authority for Subcontracting in the Private Sector:

    "ERG must appoint real companies with real Congolese shareholders."

  • ERG Spokesperson:

    "ERG Africa’s policy is to comply with all applicable laws and regulations of the countries in which we operate, including local content legal and regulatory requirements... We also require our business partners to comply with relevant applicable laws and regulatory frameworks and to adhere to the same standard."