Sources say China's Norinco sweetens its bid for Congo copper mining as the deal stalls.

China North Industries Corp., also known as Norinco has offered to increase the Congo government stake in its bid to purchase copper and cobalt assets from Chemaf SA to help smooth the way to a deal.

The $1.4 billion offer made by China's defence and industrial giant, in June, stalled when Congo state miner Gecamines put forward its own unsolicited proposal for the Chemaf asset. This exacerbated a standoff that was already complicated by U.S. officials who were lobbying against China’s grip on central Africa’s mineral-rich Copperbelt.

Sources who requested anonymity said that Norinco had proposed to the Democratic Republic of the Congo to increase its interest in Chemaf’s Mutoshi and Etoile Mines from 5% to 15%, at no extra cost, subject to negotiation.

Sources say that Chemaf - a longtime partner of commodities broker Trafigura - made the offer to the Congolese government on behalf of Norinco last month. It has been discussed since then.

Sources said that Norinco told the Congolese Government it was flexible with the future structure of its shareholdings, as long as the company retained a majority stake.

The Chinese company has not responded to any questions sent via email.

Sources said Norinco offered Congo a proportional share of metal produced by Chemaf, which the Congolese government could then sell. This is similar to the deal Gecamines made with China's CMOC.

Norinco owns already the Comica and Lamikal Mines in Congo.

Sources said that it offered Chemaf assets worth $900 million, including the settlement of debts. It also pledged $500 million more to complete Etoile's and Mutoshi's expansion projects.

Chemaf has declined to comment.

GEMINES DIGS IN

Gecamines is the owner of the lease for Chemaf Mutoshi Mine and Norinco cannot proceed with its bid without its approval.

Robert Lukama, chair of the board at Norinco, told reporters in November that Gecamines' offer for about $1 million was a viable deal.

Chemaf accused Gecamines in a letter last week of intentionally frustrating the sale process, while failing to submit a competitive bid.

Chemaf, in a letter sent to Gecamines in response to their request for access to its miner's accounts, stated that any buyer would have to pay $920 million of debt, and then commit $500 million towards developing the two mines as Norinco had offered.

Lukama refused to elaborate.

The letter stated that Chemaf’s creditors including Trafigura and First Bank have not received payment for 18 months. They want the deal to be concluded. Norinco’s offer will make $920 million available immediately to Chemaf’s trade creditors, lenders and other stakeholders.

Trafigura has declined to comment.

Chemaf said that Gecamines also indicated it does not currently have the funds in place to develop and pay for the assets.

Kizito Pakabomba, Congo's Mines minister, did not reply to a comment request. In February, he said that the government is working on finalising the acquisition. Felix Njini, Johannesburg; Emelia Sithole Matarise and Kirsten Donovan edited the article.

(source: Reuters)