3 April 2008
DRC mining contract commission to push for a greater share in the Tenke Fungurume mining concession, one of the largest copper-cobalt deposits in the world. Critics charge that EIB's investment in the highly contested project before the conclusion of the contract review was "irresponsible."
The results of a nearly year-long mining contract review process conducted by the Democratic Republic of Congo (DRC) government were finally released last month. The controversial Tenke Fungurume concession in mineral-rich Katanga Province is among the 61 contracts signed over the last decade - during the Congolese civil war and under the transitional government - that have been slated for renegotiation or cancellation. Bloomberg reports that “the Mines Review Commission wants state-owned [mining company] Gecamines to increase its stake in the copper and cobalt project to 45 percent, from 17.5 percent.”
The concession, in which US mining giant Freeport McMoRan holds a majority stake, spans an area of 600 square miles and covers one of the largest copper-cobalt deposits in the world.
The European Investment Bank (EIB), which in July 2007 approved a €100 million ($150 million) investment in the project, has come under fire from civil society groups who, according to the Guardian, “are furious that by saying it was prepared to back the project before the review, the EIB appeared to be pre-judging the review’s conclusions.” While the EIB insists that it will not disburse the loan until the contract is cleared by the DRC government, critics argue that approving the project amounts to a serious disregard for relevant sovereign processes.
Meanwhile, the EIB announced last month that it plans to endorse the Extractive Industries Transparency Initiative (EITI), which requires that governments and companies voluntarily disclose EI revenue payments and receipts. While civil society groups such as the newly formed Counter Balance coalition on the EIB welcome the move, “they emphasised the major contradiction between the development and transparency ideals in the initiative and the realities of the EIB’s lending practices,” pointing to the Tenke loan which is “notorious for the lack of transparency and the alleged corruption surrounding it.”
In a recent press release, Counter Balance asserts that “many of those contracts [under revision], including that of TFM [Tenke], are characterized by gross irregularities or imbalances such as a lack of transparency in the negotiation and awarding of deals, conflicts of interest, a failure to properly assess Congolese assets prior to the deals and the inclusion of terms that are highly disadvantageous to the Congolese government.” They go on to add that “in light of the questionable validity of the Tenke contract, the EIB’s financing of the project can only be described as an irresponsible investment.”
- Congo wants changes to Freeport copper mine contract by Franz Wild and Stewart Bailey, March 20, 2008 (Bloomberg website)
- The shadowy bank that has loaned £150bn of your cash by Heather Stewart, March 2, 2008 (Guardian website)
- EU house bank’s penchant for dodgy deals in Africa must end, demand campaigners, Counter Balance, March 13, 2008 (CEE Bankwatch website)
- EIB approves DR Congo mining project despite ongoing government review, July 20, 2007 (BIC website)