DR Congo 'transfers mining royalties to Kabila ally'

Nov 16, 2016

"The royalties could generate as much as $880 million (820 million euros)."

The Democratic Republic of Congo's state mining firm has signed away royalties from one of the country's most lucrative mining projects to a company owned by a close friend of President Joseph Kabila, Global Witness said on Tuesday, allegations that were swiftly denied.

The NGO, which fights corruption and environmental and rights abuses, said state firm Gecamines signed over the royalties from Swiss mining giant Glencore for a copper project known as KCC to a Cayman Islands company called Africa Horizons Investment Ltd.

Africa Horizons is owned by Israeli billionaire Dan Gertler, who Global Witness said was involved in murky mining deals in DR Congo and was a close friend of Kabila.

Gertler's Fleurette group hit back at the Global Witness claim, saying it was "highly misleading" and "based on factually inaccurate information".

The financial calculations are "amateurish to the point of bogus," Fleurette said.

'Full value'

The January 2015 deal related to the Kamoto copper mines in southeastern DR Congo and was signed between Gecamines and the Fleurette Group.

Glencore, which controls and operates KCC, said in an email to AFP that it was "not involved in the negotiations between Gecamines and Africa Horizons" and that KCC "acted in accordance with the instructions it received from Gecamines" to operate the royalty transfer.

Global Witness said the contract "does not explain what, if anything, Congo's state mining company received in compensation for handing over these rights" from the Kamoto mines.

"The royalties could generate as much as $880 million (820 million euros) -- more than Congo's annual health spending," it said.

"It's troubling that the state miner Gecamines has signed away rights to potentially huge flows of cash that should go towards building Congo's future," said Global Witness campaigner Pete Jones.

Jones said the contract "provides no reason for Gecamines giving away these royalties".

"It is imperative that Gecamines and Gertler explain what is behind this agreement. If they can't show that this is a good deal for Congo, there should be an investigation into what's really behind the agreement," he said.

However, Fleurette said that the deal "ultimately resulted in Gecamines safeguarding value for the DRC economy and Fleurette making a considerable loss due to the subsequent collapse in commodity prices and suspension of... operations."

Gecamines sold the royalties just before operations were suspended, meaning that Fleurette had to pay "in full for a royalty stream that ceased soon afterwards".

"While Fleurette was left unable to recoup its investment, Gecamines received full value for it," according to the group.

Gecamines director general Deogratias Ngele Masudi told AFP that the firm "does not comment on statements by NGOs even if they are international ones".

And Glencore, in an email to AFP, simply said it was "not involved in the negotiations between Gecamines and Africa Horizons".

DR Congo, a former Belgian territory, has one of Africa's richest mineral reserves but has been wracked by unrest, misrule and corruption since independence.

Kabila took power in 2001, 10 days after the assassination of his father, the then-president, Laurent Kabila.

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