Government panel to recommend cancellation or renegotiation of over 60 mining contracts in DRC

14 November 2007

Leaked report lists IFC-sponsored Kalukundi concession among contracts recommended for renegotiation.

A leaked portion of the report by an inter-ministerial panel charged with reviewing mining contracts signed over the last decade in the Democratic Republic of Congo (DRC) has sent shockwaves across the country, with its calls for renegotiated or outright cancellation of all of the 61 contracts it examined. While officials of both the DRC government and mining companies scurry to downplay the significance of the report, shares in many mining companies heavily invested in DRC have tumbled. The stock price for Africo Resources Ltd., for example, dropped by nine percent last week, after it emerged that the report recommended Africo’s disputed Kalukundi concession agreement be suspended pending a Supreme Court decision on its legality.

Just last month, the World Bank’s private investment arm, the International Finance Corporation (IFC), approved a $7.6 million investment in Africo to conduct the feasibility study for the Kalukundi cobalt-copper deposit in DRC’s Katanga Province, and is reportedly considering an additional $50 million investment in the operation of the mine. Civil society groups have argued that the willingness of public lenders such as the IFC to invest in projects whose contracts are under examination appears to prejudge the outcomes of the government review, or signal a serious disregard for relevant sovereign processes.

Following widespread press coverage of the recommendations contained in the leaked document, the DRC government made an official statement in an attempt to placate investors, stressing that “the great majority of companies currently in the DRC will remain in the country for the long term,” and adding that it is ultimately up to the government, and not the commission, to decide which contracts will be renegotiated or cancelled. According to Bloomberg, the panel is expected to recommend that 23 of the contracts be cancelled outright, and that the remainder be changed.

Resources

• NGOs campaign for publication of mining contracts report, Catholic Information Service for Africa, November 9, 2007
• Agencies pressure DRC commission to publish mining review by Selah Hennessy, Voice of America, November 8, 2007 (VOA website)
• DRC says most mining firms will stay despite review by Joe Bavier, Reuters, November 6, 2007 (Reuters website)
• Behind the DRC mining contracts review by Barry Sergeant, Mineweb, November 4, 2007 (Mineweb website)
• Congo panel to recommend 61 mine contracts be changed by Franz Wild and Stewart Bailey, Bloomberg, November 1, 2007 (Bloomberg website)