Victor Kasongo, deputy mines minister, DRC
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Half of Congo licenses may not comply

Posted: Tue, 03 Apr 2007

[miningmx.com] -- UP to 50% of mining contracts signed in the Democratic Republic of Congo (DRC) may be unfair to the state and may have to be renegotiated, said deputy mines minister, Victor Kasongo.

“A third to half of the contracts don’t meet our criteria,” said Kasongo in a telephonic interview from Pretoria, South Africa. “In many cases, the investors don’t have any money, or they have not met their commitment to develop the assets.”

The DRC’s mines minister, Martin Kabwelulu, issued a memorandum dated March 27 in which he said negotiations on new mining transactions would be suspended until existing agreements had been reviewed.

Kasongo estimated that about 70 companies would be affected by the review in total, though not all of them would have to adjust their agreements. Kasongo also supported a statement Kabwelulu made to Bloomberg News on March 7 that no contracts would be annulled. “There is nothing to worry about as long as you’ve got clean contracts,” Kasongo said.

The Carter-Baker Commission, which was created in 2004 to review electoral reform in the US, had been retained by the Congo’s government. Kasongo said it would take about 90 days to review all contracts. Companies failing to meet certain criteria would have 60 to 90 days to map out a new plan, he said.

“First on the list is that investing companies must have paid their tax,” said Kasongo. “That’s the first question.”

“The second question we’ll ask is how mining companies are respecting the minimum requirements of the contract.” This included efforts to invest in infrastructure and other social upliftment projects. “Our interest here is the people of the Congo,” he said.

Included in the 70 companies invested in the DRC was AngloGold Ashanti which is developing in the Mongbwalu concession in the northern district of Ituri. Said Steve Lenahan, spokesman for the South African gold producer: “We’ve an agreement with Okimo (L’Office des Mines d’or de Kilo-Moto), a state-owned gold mining company, to review our contract. We’ll do that in due course.”

“Bear in mind our project there is only exploration and not a gold producer, and will be that way for some considerable time. But we have a social responsibility obligation,” he said.

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Charles Needham, CEO of Metorex, which is developing the R2.55bn Ruashi copper/cobalt project in the DRC, said it expected to meet government contract requirements. “From an insular perspective, the review might give us further opportunities. We need to keep our ears to the ground.”

Jonathan Leslie, executive chairman of Nikanor, the London-listed company that is redeveloping the $1.6bn KOV copper/cobalt mine in the Congo’s Katanga province, said its mining contract was negotiated following the 2002 mining code.

“I think we’re only one of three that has done so after the code,” said Leslie in a telephonic interview. “If the agreement was particularly rapacious then you might have cause for worry. But the economic returns of our agreement is very reasonable.”