SMM network news: Grasp the opportunities of the Belt and Road, and actively practice the strategy of going global. On June 2, the reporter learned from Luoyang Molybdenum Industry that the China-Congo Investment Forum and the equity delivery ceremony of Luoyang Molybdenum Industry's acquisition of Tenko Fungurume Mining was held in Kinshasa, capital of the Democratic Republic of Congo, jointly organized by the China-Congo Cooperation Project Coordination Office, the Chinese Embassy in the Democratic Republic of Congo and Luoyang Molybdenum Industry. Chinese Ambassador to the DRC Wang Tongqing, DRC Mining Minister, Chairman of DRC National Mining Corporation and Chairman of Luoyang Molybdenum Industry Li Chaochun opened the ceremony for the delivery.
It is understood that in accordance with the international development strategy, Luoyang Molybdenum industry actively integrates into the construction of the Belt and Road, and seeks and establishes a relatively stable supply base of mineral resources overseas. Tenco Fungurume Mining (TFM) is one of the largest copper and cobalt mines in the world in terms of reserves and grade, and the largest foreign-invested project in DRC. In May last year, Luoyang Molybdenum paid more than $2.65 billion for a 56 percent stake in TFM held by Freeport Group and secured an exclusive lock-in on future purchases of BHR's 24 percent stake in TFM. After the acquisition, Luoyang Molybdenum will hold a combined 80 per cent stake in TFM and the remaining 20 per cent in TFM will be held by Congo National Mining Corporation. Through the project, Luoyang Molybdenum will become the world's second-largest cobalt producer and the world's leading copper producer.
Li Chaochun delivery at the ceremony, said the luoyang molybdenum industry in the future will be in their clinging to the first cooperation between the two countries in the new opportunities, through developing overseas business, bold go out in the global range configuration of high quality resources, make the company resources reserves more abundant, the product portfolio is diversified, also for more domestic enterprises go out and participate in the area construction to provide beneficial reference to all the way, Make new contributions to the development of local society and economy.
Link: How to refine the world's leading rare metal enterprises?
1. What about the mining company?
According to Luoyang Molybdenum, the Tenko Fungurume copper-cobalt mine, located in the Kolevich region in southeastern DRC, is currently the largest copper-cobalt project in DRC.
In 2015, Tenke FengGurume copper and cobalt mine produced 204,000 tons of copper metal and 16,000 tons of cobalt metal, accounting for about 16% of the global total cobalt production, making it the world's largest cobalt producer. Tenke has proven and approximate grade reserves of 3.8 million tonnes of copper and 500,000 tonnes of cobalt, which can support production for approximately 25 years. It has proven and controlled resources of 13.1 million tons of copper and 1.3 million tons of cobalt.
Tenko Fungurume copper-cobalt mine has high grade and low cost resources, with a net cash cost of copper of approximately $1.21 per pound, compared with a global average price of $2.50 per pound in 2015.
Such a good copper and cobalt ore, is the rare metal industry hot properties. The bid was made by a number of international mining giants, and Li Chaochun, chairman of Luomolyu, said it was not easy to win the bid.
2. What does it make sense to buy this company?
According to the U.S. Geological Survey, the world's cobalt reserves were 7.1 million tons in 2015, of which the DRC held 3.4 million tons, accounting for 48 percent of the world's cobalt reserves and the world's largest. Australia, Cuba, Zambia, Russia, Canada and New Caledonia account for 84 percent of the world's total cobalt reserves. And the upstream cobalt resources have been basically divided up by Glencore, Eurasia Resources and Vale. China's cobalt reserves are only 80,000 tons, accounting for only 1.11% of the global total.
In 2015, China produced 2.2m tonnes of copper concentrate, which is not nearly enough to meet domestic demand, with the Chinese market 90 per cent dependent on imports. The domestic copper concentrate has low metal content and is more difficult to mine, so it does not have advantages in terms of cost. Currently, the importing countries of copper concentrate mainly include Chile, Peru and Mongolia.
With the acquisition, Luoyang Molybdenum will become the world's second-largest cobalt producer and the world's leading copper producer.
3. Other super overseas acquisitions of Luoyang Molybdenum
On October 1, 2016, the Brazilian Niobium and Phosphorus acquisition project was completed, which marked the formal completion of the $1.5 billion acquisition of AANB and AAFB by Luoyang Molybdenum, making Luoyang Molybdenum one of the largest phosphate fertilizer producers in Brazil and the second largest niobium producer in the world.
Aanb is one of the world's top three niobium ore producers. Aafb owns the highest grade phosphorus pentoxide resource in Brazil, with a mine life of at least 46 years. After the deal is completed, Luoyang Molybdenum will indirectly own 100 per cent of AAFB and AANB, giving it full control of Anglo American's niobium and phosphorus operations in Brazil and about 10 per cent of the global niobium supply market.
4. What is the use of cobalt, niobium and other rare metals controlled by Luoyang Molybdenum Industry?
Cobalt is one of the most important strategic minerals in the world and a key element in the cathode materials of ternary batteries. Due to its application in ternary lithium-ion batteries and aerospace high-temperature resistant alloys, cobalt has an unlimited future development prospect. Benefiting from the rapid growth of new energy vehicles at home and abroad, cobalt demand for ternary power batteries will increase significantly in the future.
Since the 21st century, the domestic cobalt consumption growth momentum is obvious. In 1998, China consumed 2,786 tons of cobalt, accounting for about 9% of the global total. Cobalt consumption was 14,700 tonnes in 2007, accounting for about 23 per cent of the global total, surpassing Japan as the number one cobalt consumer for the first time.
The increase in cobalt demand is mainly attributed to the application of lithium batteries, where cobalt is mainly used in lithium cobalt oxide, nickel-cobalt manganese ternary materials, hydrogen storage alloys and spherical nickel. Lithium-ion batteries are widely used in electronic products such as smartphones and tablets, and are beginning to be used in high-power batteries such as electric cars. The United States, Europe, China and other countries to support the introduction of electric vehicle policies on the urban environment caused a small direct impact of new energy cars have a very large space for development. According to the new energy vehicle planning target of each country, the global new energy vehicle sales will exceed 10 million by 2020, and the global cobalt consumption will reach 170,000 tons.
Niobium is known as industrial monosodium glutamate. China is short of niobium resources and mostly relies on imports from Brazil. The supply side of the global niobium market is highly concentrated, with about 80 to 85 percent of the market held by CBMM, the world's largest niobium producer, while the rest is largely held by Anglo American's AANB and MagrisResources. The successful acquisition of AANB gives Luoyang Molybdenum a 10% share of the world's niobium metal.
Niobium is a soft gray metal, most important for the production of high strength steel. Adding niobium to steel products can greatly improve the strength of products. In addition, niobium is also widely used in superalloy, casting, superconducting materials, optical glass and other industries. The price per kilogram of niobium is about seven times higher than that of copper.
According to the data released by the US Geological Survey in 2014, in 2013, the global niobium production was about 51,000 tons, and only two countries, Brazil and Canada, accounted for about 98% of the world's total niobium production. North America and Europe are major consumers of niobium, and China is also a major consumer of niobium. In 2010, China's niobium consumption accounted for a quarter of the global total.