Mercuria Energy Group has agreed to pay up to $250 million to units of Shanghai Jayson New Energy Materials Group for three years of copper supply from the Democratic Republic of Congo, according to people familiar with the matter cited by Bloomberg. The buyers are Jayson subsidiaries Hongkong Excellen Mining Investment Co and Singapore Excellen, and the supply includes output from the newly started Kinga Kila project.
The structure is the story as much as the number. Trading houses are paying large sums in advance to secure copper as prices soar, and Congo, now the world’s second biggest copper producer after Chile, is where the growth is. Trafigura previously paid Ivanhoe Mines $200 million in advance for copper anodes from Kamoa-Kakula, and Mercuria itself paid $100 million to guarantee three years of output from Eurasian Resources Group. The syndication financing most of Mercuria’s advance to Jayson is expected to be supported by Rabobank among other lenders, the people said, underlining bank appetite for prepayment structures.
Ownership links the deal to the battery chain. An investment vehicle belonging to Robin Zeng, the chairperson of battery maker Contemporary Amperex Technology Co, owns nearly 30 percent of Hongkong Excellen, which holds the Congolese copper ventures, while Jayson, a maker of precursor materials for lithium-ion batteries, controls the rest.
Mercuria declined to comment and Jayson and its subsidiaries did not immediately respond to requests for comment, so the $250 million figure and the three year term rest on Bloomberg’s unnamed sources. The deal is reported here at grade C on that basis, and will be upgraded if either party confirms the terms.