COVEC provides $60 million supplier’s credit to Gécamines

COVEC provides $60 million supplier’s credit to Gécamines On April 7, 2006, a joint venture called Compagnie Minière de Luisha (COMILU or 绿纱矿业有限责任公司 or 绿纱矿业) was established by China Overseas Engineering Corporation (COVEC) and Générale des Carrières et des Mine SARL (Gécamines SARL) to mine 26.1 million tons of copper and cobalt deposits at the Luisha deposit (locational coordinates: -11.16889, 27.00917).

COVEC holds a 72% equity stake and Gécamines holds a 28% equity stake in COMILU.

On the same day, China Overseas Engineering Corporation (COVEC) and Générale des Carrières et des Mine SARL (Gécamines SARL) signed a $60 million supplier’s credit (loan) agreement to support COMILU’s mining development activities.

Its final maturity date is August 31, 2028.

It was secured by (i.e. collateralized against) the (a) revenues of COMILU; (b) the Gécamines sale of the Luisha mining deposit to COMILU, and (c) Gécamines’ 28% equity stake in COMILU.

In the event that the Luisha copper and cobalt deposit proves less profitable than expected, the assets acquired by Gécamines through the $60 million COVEC loan will also become sources of collateral.

As of December 31, 2020, the loan had disbursed $60,196,008 and the borrower was in principal arrears (worth $24,078,405) and interest arrears (worth $32,901,385).

As of December 31, 2022, the loan had disbursed $60,196,008 and the borrower was in principal arrears (worth $33,709,767) and interest arrears (worth $40,324,034).

The loan's principal amount outstanding was $60,196,008 as of December 31, 2020, December 31, 2021, and December 31, 2022. The Luisha mine’s smelting system was constructed in two phases.

The first phase of the hydrometallurgical system officially started construction in April 2012, and was put into operation in April 2013, producing standard cathode copper.

The second phase of the project started construction in May 2013, and the flotation system began trial operations in June 2014. The civil construction of the roasting system and environmental protection acid production started in April 2014. These activities were completed in October 2015. The material was put into trial operation in late November 2015, and the trial production began in January 2016.

On April 30, 2016, the mine officially entered the production stage. In July 2018, construction of the oxygen production station and the flue gas acid production started.

In early May 2019, the docking of the old and new acid production systems and the renovation of the roaster were carried out. By early June 2019, all the docking renovation projects were completed. The project was originally scheduled for completion by the end of December 2020. The Luisha mine reportedly employs 139 Chinese workers and 680 Congolese workers.