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MarketScreener Homepage  >  Equities  >  SHANGHAI STOCK EXCHANGE  >  China Molybdenum    603993   CNE100001NR0

CHINA MOLYBDENUM

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China Molybdenum's Congo mine blames mining tax, low metal prices for loss

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08/23/2019 | 10:50am EDT
FILE PHOTO: Excavators and drillers at work in an open pit at Tenke Fungurume, a copper and cobalt mine northwest of Lubumbashi in Congo's copper-producing south

GOMA (Reuters) - One of the biggest copper and cobalt mines in Democratic Republic of Congo (DRC), China Molybdenum-owned Tenke Fungurume, has told employees it had missed production targets and is operating at a loss.

The miner blamed sliding copper and cobalt prices as well as a heavy tax burden due to DRC’s new mining code which increased the tax rate for cobalt, angering multinational mining companies operating in the country.

Tenke Fungurume Mining, which is 80% owned by China Molybdenum with the remainder controlled by state mining company Gecamines, also said power failures, issues with production equipment, and a deteriorating ore grade contributed to the target miss.

"The company is in a deficit zone," a letter from management sent to employees on Aug. 16 read.

China Molybdenum did not immediately respond to a request for comment.

Tenke Fungurume is also grappling with trespassing from illegal miners, which came to a head in June when Congo's military deployed hundreds of soldiers to protect the mine.

The mine's struggles reflect a more difficult operating environment for miners in DRC in general.

Glencore earlier this month said it would halt production at its Mutanda cobalt mine in DRC, the world’s biggest, for an expected two years, citing DRC’s revised mining code among the factors behind the decision.

Tenke Fungurume management acknowledged the move in the letter, saying "some mining companies are reducing or stopping overall production to cope with the current situation".

(This story corrects spelling of company name in headline)

(Reporting by Fiston Mahamba; Writing by Helen Reid; Editing by Alessandra Prentice and David Holmes)

Stocks mentioned in the article
ChangeLast1st jan.
CHINA MOLYBDENUM 0.27% 3.73 End-of-day quote.-1.06%
GLENCORE 1.24% 256.1123 Delayed Quote.-13.16%
GOLD 0.32% 1496.192 Delayed Quote.17.04%
LME COPPER CASH -0.30% 5745 End-of-day quote.-1.61%
SILVER 0.22% 17.713 Delayed Quote.16.43%
SILVER - CAPE VERDE ESCUDO 0.00%End-of-day quote.0.00%
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Financials (CNY)
Sales 2019 21 473 M
EBIT 2019 3 424 M
Net income 2019 2 194 M
Debt 2019 3 044 M
Yield 2019 1,10%
P/E ratio 2019 44,0x
P/E ratio 2020 25,5x
EV / Sales2019 4,01x
EV / Sales2020 3,63x
Capitalization 83 005 M
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Number of Analysts 10
Average target price 3,78  CNY
Last Close Price 3,72  CNY
Spread / Highest target 58,3%
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