American media "pops champagne" after taking the Congo's large cobalt mine from Chinese companies

Ask AI · Can an eight-person team handle the complex operational challenges of the Congo cobalt mines?

【By Observer Network (Guancha.cn) · Ruan Jiaqi】

Just after an American company acquired a Congo (DRC) cobalt mining company, U.S. media hurriedly celebrated with “champagne,” eagerly claiming that the Trump administration had “won” in its strategic competition with China over critical minerals.

According to a March 31 report by The Wall Street Journal, last Friday, the U.S. mining company Virtus Minerals successfully acquired Chemaf, a major Congo (DRC) cobalt mining operator, for $30 million.

U.S. media promoted this heavily, stating that Chemaf is one of the few core cobalt assets not yet controlled by Chinese interests. This acquisition marks the completion of a strategic layout of Congo (DRC)’s key cobalt resources—finally “put into action”—and is viewed as a “major victory” for the Trump administration.

Reportedly, cobalt is widely used in jet fighters, mobile phones, and electric vehicle batteries. The Congo (DRC) accounts for nearly 75% of global cobalt production. Chemaf’s capacity can cover about 5% of the world’s cobalt output.

For decades, China has invested hundreds of billions of dollars in deepening its involvement in Congo (DRC)’s mining sector. In 2024, a Chinese company once reached an acquisition agreement with Chemaf, but the deal ultimately fell through due to lack of government approval. Soon after, Virtus Minerals, supported by the U.S. government, quickly intervened and finalized the deal.

However, many industry insiders question whether, even after the paper deal is completed, Virtus Minerals can actually activate the mine’s production capacity. The company previously invested in a copper-cobalt processing plant in Lubumbashi in 2023, which remains stalled due to ownership disputes.

Furthermore, after the acquisition, Virtus Minerals will face multiple complex challenges, including massive corporate debt, harsh operational environments, weak local infrastructure, and shortages of skilled labor. This small startup, with only eight employees, along with partners lacking practical experience in Africa, will face enormous difficulties in operational implementation and resolving ownership disputes.

Chemaf, a major Congo (DRC) cobalt mining operator

U.S. media reports indicate that once the acquisition is completed, Virtus Minerals is expected to become the first U.S. company in over a decade to conduct large-scale mining operations in Congo (DRC). This also ventures into a field that other U.S. companies tend to avoid: Chemaf carries approximately $1 billion in debt, with its flagship high-grade Mutoshi mine facing the influx of thousands of informal workers. Additionally, Congo (DRC) is one of the most difficult countries in the world for doing business, making operations extremely challenging.

Finding a U.S. company willing to acquire Chemaf is a formidable task. To ensure supply chain security, the Biden administration has repeatedly promoted this family-run copper-cobalt mining company to U.S. firms. However, due to negative reputation, weak local infrastructure, shortages of skilled labor, resource nationalism, and government corruption, most U.S. companies remain cautious.

It was only with the emergence of Virtus Minerals—an underdog highly anticipated by the U.S.—that this deadlock was finally broken.

This Delaware-registered company, with only eight employees, focuses on investments in national security. It was founded in 2022 by Phil Braun, a former member of the U.S. Army Special Forces “Green Berets,” with expertise in supply chain and logistics, and Andrew Powch, a graduate of the U.S. Naval Academy and Harvard Business School, who previously worked in private equity and at McKinsey.

A U.S. State Department official confirmed to U.S. media that the U.S. fully supports this acquisition, listing it as a “priority project.” The official also claimed that the move aims to demonstrate to the Congo (DRC) government that U.S. investments can bring tangible benefits to the country’s economy.

According to disclosures, Virtus Minerals completed the Chemaf acquisition for $30 million and pledged to raise over $700 million in follow-up investments. The company plans to sell all future production to U.S. or “U.S.-aligned” buyers.

To advance the project, Virtus Minerals will partner with India’s Lloyds Metals and Energy, contributing an initial $200 million; New York-based Orion Resource Partners will provide $475 million in financing; and the remaining $75 million will come from other sources.

Sources close to Chemaf revealed that the company currently owes about $1 billion, including payments to local contractors. Virtus Minerals declined to comment on debt repayment plans with local contractors.

Virtus Minerals’ CFO, Powch, only stated that the company has reached an undisclosed debt settlement agreement with Chemaf’s largest creditor, Singapore’s Trafigura Group. In 2022, Trafigura led a $600 million syndicated loan used to expand Chemaf’s mineral processing capacity and to push forward mechanization upgrades at the Mutoshi mine.

Powch also indicated that an additional $250 million to $300 million in capital expenditure is needed to upgrade infrastructure, increase copper output to 75,000 tons annually, and cobalt to 15,000 tons annually.

U.S. media also highlighted Chemaf’s troubled history, including issues such as child labor, bribery, and frequent safety accidents.

In 2018, The Wall Street Journal visited the Mutoshi mine and found miners working without helmets, protective shoes, or safety gear, relying solely on picks and shovels for manual mining. Accidents such as flooding and earth collapses that bury miners alive occurred frequently.

Following that visit, local authorities attempted to enforce compliance among informal miners and standardize operations, but COVID-19 forced the work to halt. Virtus Minerals’ management confirmed that many informal miners still work in high-risk conditions at the site.

Like Virtus Minerals, its partner Lloyds Metals and Energy also lacks practical mining experience in Congo (DRC). Although the company operates mines in India and other regions, and has leased mining equipment in Congo (DRC) since 2018, its core business remains focused on iron ore, bauxite, and coal in Asia.

In response to external doubts, Lloyds emphasizes its extensive experience in copper mining contracting, including operating a mine in Mozambique. The company plans to start on-site operations at Chemaf in April and aims to complete facility upgrades worth $250 million to $300 million by early next year.

This article is an exclusive report by Observer Network (Guancha.cn). Unauthorized reproduction is prohibited.