Gecamines’ CNMC deal raises questions

GECAMINES, the Democratic Republic of Congo’s stateowned mining company, said China Nonferrous Metal Mining Group (CNMC) might invest as much as $2 billion (R27bn) to develop its most prospective copper asset.

The Congolese miner in June described the agreement, through which CNMC will finance, build and operate a copper-processing facility at the Deziwa concession before transferring full ownership back to Gecamines, as a “new type of partnership” designed to increase revenue for the state, but has yet to provide full details of the arrangement.

“It’s not a partnership, it’s a financing agreement, a loan to be reimbursed,” said Kandolo Mafuta, Gecamines’ director of partnerships.

Off-take agreement

In June, Gecamines said that CNMC would finance the construction of the plant with an initial capacity for 80000 tons of copper a year, in return for a 51 percent stake in the project. CNMC would then be reimbursed through an offtake agreement over a fixed period that had not yet been agreed before full ownership is transferred back.

Kandolo said he could not confirm how long it might take to repay the investment, or when Gecamines would retake full ownership of the project.

Gecamines, which has $1.58bn of debt, borrowed $196million to acquire Deziwa in January 2013, stating that it would provide the reserves needed to reintroduce the company as a major producer.

The Carter Centre and Global Witness have called for the release of details of the deal and to publish an initial agreement signed with CNMC in January, in line with Congolese state requirements.

The company said talks were continuing and a January accord with CNMC was designed only to frame negotiations and did not represent a binding contract that needed to be published.