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Carter Center Releases Comprehensive Report on the DRC’s State-Owned Mining Company and Investment Partners

November 3, 2017

ATLANTA — The Carter Center today released the first part of a comprehensive report, A State Affair: Privatizing Congo’s Copper Sector, which is the culmination of years of research on the contractual and financial practices of the Democratic Republic of Congo’s state-owned mining company, Gécamines, and its most important investment partners.

 

The analysis is based on 200 interviews and a review of over 100 mining contracts, at least 1,000 corporate documents, and data from the Extractive Industries Transparency Initiative covering 2007–2014.

 

The first installment details how Congo’s state-owned copper broker, Gécamines, is operating as a parallel state. It documents how Gécamines has been able to use its privileged position to generate US$1.1 billion from copper and cobalt deals between 2011 and 2014. Nearly two-thirds of these revenues – or US$750 million – cannot be reliably tracked to its accounts. Key findings include:

  • Gécamines’ control of the country’s best mining permits has allowed it to act as the primary gatekeeper to Congo’s most desirable mining assets over the past two decades. A detailed analysis of mining registry data shows the company still holds approximately 100 exploitation permits, beyond the limits set forth in the country’s mining code, likely ensuring that Gécamines will maintain its gatekeeper status.

  • This privileged position has enabled Gécamines to generate substantial revenues from its partnerships, averaging US$262 million per year in royalties, bonuses, and other contractual fees from 2009 to 2014. Those revenues are not directed to the public treasury, and they are largely beyond the realm of public oversight.

  • While Gécamines has asserted that these revenues would contribute to its planned revival of mining production, in practice they appear to have been mainly used for other purposes. Nearly two-thirds of the US$1.1 billion the company was contractually entitled to between 2011 and 2014 cannot be reliably tracked to Gécamines’ accounts. This raises significant questions about the actual destination of Gécamines’ income.

  • Prior to both the 2006 and 2011 elections, deal-making by state-owned mining companies accelerated, generating significant proceeds that have been difficult to trace. As the country faces a period in which critical elections are supposed to take place, conditions are ripe for additional unreported sales and revenue diversion. It is troubling that Gécamines has refused to publish contracts for several mining deals that may have generated more than half a billion dollars in 2016-2017.

Though the DRC is rich in natural resources, its people are among the poorest in world. Despite billions of dollars in private investment in the extractive sector, the proceeds have thus far generated limited public benefits. The Carter Center’s report presents recommendations to improve Gécamines’ transparency and accountability so that the company better contributes to the development of the DRC and the welfare of the Congolese people.

 

“The DRC has the potential to overcome the legacy of mismanagement and corruption that has plagued its extractive industries,” former U.S. President Jimmy Carter wrote in the report’s foreword. “I call on political leaders to work with the private sector, civil society, the international community, and others to ensure responsible stewardship of the DRC’s natural resources.”

 

In coming weeks, The Carter Center will release four case studies as part of A State Affair, focusing on some of the DRC’s most important mining projects. These studies illustrate the overall trends of the sector in greater detail and shine a light on the decisions and practices that have deprived the DRC and its people of many of the benefits of Gécamines’ deal-making.

 

View full report >

 

n Atlanta, Soyia Ellison, soyia.ellison@cartercenter.org
In Atlanta, Deanna Congileo, deanna.congileo@cartercenter.org
In New York, Daniel Mulé, daniel.mule@cartercenter.org
In Brussels, Elisabeth Caesens, coordo@congomines.org

 

Source: https://www.cartercenter.org/news/pr/drc-110317.html

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