LUBUMBASHI — The Carter Center urges the government of Democratic Republic of the Congo to release the contract for the transfer of Congo’s most productive copper mining joint venture, Tenke Fungurume Mining (TFM), to new investors. The Center also calls on the government and the divestors, New York-listed Freeport McMoRan Inc. and Toronto-listed Lundin Mining Corp, to disclose material information about the deal, including compensation due to Gécamines in exchange for dropping its previous objections to the transfer.
In May 2016, Freeport McMoRan, TFM’s majority shareholder and operator of the mine, announced the sale of its 56 percent stake to China Molybdenum Co. for at least $2.65 billion. Lundin followed suit in November 2016, selling its 24 percent stake to BHR Partners for $1.14 billion. The state-owned mining company Gécamines, which retains a 20 percent stake in the project, until recently had blocked the transactions, initiating arbitration in Paris and a lawsuit in Lubumbashi. In the past, Gécamines has opposed similar transactions, but has lifted its objections after receiving compensation.
Bloomberg News reported yesterday that Gécamines dropped its lawsuits after reaching an agreement “that will provide some financial compensation to Gécamines as well as the right to more consultation and control should the future owners of the asset decide to sell it.” DRC law requires the government publish the full terms of the agreement within 60 days of signature, and, as stock-market listed companies, TFM’s shareholders are required to disclose any material transaction to their investors. So far, none of the parties involved in the transaction has provided any further information.
The DRC government and TFM shareholder Freeport McMoRan have repeatedly expressed their strong commitment to the Extractive Industries Transparency Initiative (EITI), which requires that all companies disclose payments to state entities, including to state-owned companies like Gécamines, and that state entities also disclose their revenues.
“The DRC and TFM’s operator Freeport McMoRan both have a seat on EITI’s international board,” said Daniel Mulé, the Carter Center’s extractive industries governance program manager. “It is essential that all parties to the transaction abide by their transparency commitments and provide further information on the deal.”
The TFM deal is the latest in a growing list of undisclosed Gécamines transactions. Other recent deals for which contracts remain unpublished include the 2016 Metalkol asset sale contract for the Kolwezi tailings and the 2015-2016 strategic partnership agreement with China Nonferrous Metal Mining Group.
Despite collecting hundreds of millions of dollars in annual contractual revenues, Gécamines has consistently failed to achieve its strategic production goals, to reduce its debt burden, or to provide promised compensation to its workers and retirees. Gécamines does not publish annual reports or financial statements. This lack of transparency impedes public oversight of the state-owned company and makes it impossible to ensure that DRC’s mineral resources benefit the Congolese people.
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