Norton Rose Fulbright advises Shalina on $600m financing agreement with Trafigura

Global law firm Norton Rose Fulbright has advised Shalina Resources (“Shalina”), a leading and established vertically integrated copper and cobalt producer with assets in the Democratic Republic of Congo (DRC), on a US$600 million financing agreement with global commodity trading company Trafigura Pte. Ltd. (“Trafigura”). 

This financing will enable Shalina to fund the development of the fully mechanised Mutoshi mine and SX-EW processing plant in Kolwezi and the expansion of the Etoile SX-EW processing plant in Lubumbashi. Both the Mutoshi and the Etoile mining assets are owned by Shalina’s DRC subsidiary, Chemical of Africa SA (“Chemaf”).

The arrangements with Trafigura also cover the marketing by Trafigura of all the cobalt hydroxide, and the purchase by Trafigura of all the copper, produced by the Mutoshi and Etoile Projects.

The Mutoshi mine, one of the largest cobalt and copper mines in the DRC with significant resource development upside, is now expected to be producing by the third quarter of 2023. The new production will make Chemaf one of the largest cobalt producers globally at a time when demand for batteries for electric vehicles and copper for increased electrification as part of the energy transition is growing exponentially from customers across the world.

The agreement will also provide significant fiscal revenues for the DRC in royalties, duties and income tax as well the creation of 1,000 jobs.

Shalina Executive Director, Abbas Virji, commented: “We have been represented by Martin and his team for a decade and they have been fantastic. Martin has years of successful mining finance experience in Africa, and particularly DRC, which slants the odds in our direction at every stage. He is a real negotiator and has a unique ability to focus minds on the key strategic principle of a transaction. He clearly loves what he does and he Martin brings a sharp sense of humour creating an incredible energy level to everyone involved in the deal.”

Partner Martin McCann led the Norton Rose Fulbright team advising on the structuring, financing and marketing and offtake arrangements. The team included counsels James Rennard and Felicity Brown as well as associate Mike Seo. Paris partner Antoine Thibaud and associate Anne-Gaëlle Cottenceau advised on OHADA law elements of the deal. 

Martin McCann commented: “We are delighted to have been able to assist the Shalina team with this financing. They have achieved what many thought was impossible. This is one of the largest ever cobalt financings. It comes after we acted for ERG on the financing of their cobalt asset in the DRC. Clients want real experience delivering successful financings in challenging jurisdictions and we have unique experience in each of the key countries. This deal comes at a time when the world is scrambling to access all the key battery metals from cobalt to nickel and copper to lithium. The future is very exciting for those in this space.”

The team has extensive experience in the financing of the development of ground-breaking mining projects for battery materials around the world. This includes advising Red Kite on the Bacanora Minerals lithium mining operations in Mexico.