As was reported in the Financial Times on March 20th, “The government of the Democratic Republic of the Congo on Thursday published plans for the review of its mining contracts, in a move critics see as an attempt to strong-arm international companies into giving state mining companies greater ownership of their assets. “
The government of president Joseph Kabila had previously announced its intention to overhaul 61 different mining contracts, including some signed during Congo’s 1998-2003 civil war.
Some of the companies whose contracts are subject to review include De Beers, Freeport McMoRan, Anvil Mining and First Quantum Mining. According to reports, this will give a bigger role to state-owned copper mining group Gecamines.
Though critics have harsh words for the government’s contract review plans, we wonder if such a plan is justified. The government points out that many of these mining contracts were negotiated under less transparent conditions. In addition, the question of the fundamental fairness of the contract terms has been raised.
As was noted in the FT article, “The report by the government-appointed Review Commission was released to the public on Thursday, although the companies involved had been informed of the recommended changes last month. Toronto- and London-listed First Quantum Minerals has been told that its title to its huge copper and cobalt project at Kolwezi in Congo’s southern Katanga province was improperly structured. The Review Commission said the Kolwezi title had been sold off too cheaply and has advised the contract to be redrawn to include ”up-front payments” of cash and a more active role for Gecamines in management.”
If companies disagree with the Review Commission’s proposed changes, they can appeal to a taskforce of government ministers in Kinshasa, the capital, and submit any fresh data.
In light of the horrific suffering of the Congolese people over the last 20 years, let’s hope that they may be the ultimate recipients of these revised contracts as a result of this exercise by the DRC government.
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