Canadian Manufacturing

Lundin buying interest in cobalt refinery; covering 30% of price tag

Toronto-based firm will put up $97.3-million as its share of $325-million price on closing


TORONTO—Lundin Mining Corp. is spending up to $130.5-million to acquire a major interest in a large-scale cobalt chemical refinery in Kokkola, Finland.

Lundin said it will put up 30 per cent of the cost and hold an effective 24 per cent ownership interest in the refinery venture.

Freeport-McMoran Copper & Gold Inc. will put up 70 per cent of the cost and hold an effective 56 per cent interest as well as act as operator of the joint venture, which will provide direct end-market access for the cobalt hydroxide production from the Tenke Fungurume copper/cobalt mine in the Democratic Republic of Congo.

The Congoleses state mining company La Generale des Carrieres et des Mines will have a 20 per cent interest.

On the basis of the 30/70 per cent split in costs with Freeport, Lundin will put up $97.3-million as its share of the $325-million price tag on closing.

An additional consideration of up to $110-million is payable over a period of three years, contingent upon revenue-based performance targets.

Lundin’s share of that would be up to $33-million.

The Kokkola refinery processes unrefined cobalt and related metals and manufactures advanced inorganic products for use in a variety of applications in fast-growing end-use markets including batteries, chemicals and ceramics, and powder metallurgy.

The plant, with 400 employees, has been in operation since 1968, serving some 500 customers in more than 50 countries in Asia, Europe and the Americas.

“The acquisition of Kokkola will enable immediate entry and vertical value-added integration to the refined cobalt market and will ensure that all of the cobalt product from Tenke can be processed and sold in a competitive market,” Lundin president and CEO Paul Conibear said in remarks accompanying the announcement.

“We are fortunate to be acquiring a market leader in the cobalt chemical business with a fully operating and staffed refining operation in Finland and significant global sales presence. We are pleased to be extending our partnership with Freeport and Gecamines further into the cobalt market.”

Toronto-based Lundin is a diversified Canadian base metals mining company with operations in Portugal, Sweden, Spain and Ireland, producing copper, zinc, lead and nickel.

In addition, Lundin Mining holds a 24 per cent equity stake in the world-class Tenke Fungurume.