[miningmx.com] — DEMOCRATIC Republic of Congo has replaced the leadership of state mining company Gecamines due to management deficiencies and its failure to make the most of rising metals prices, officials said on Monday.
Nine officials were sacked at the weekend in a shake-up ordered by President Joseph Kabila, according to officials at the mines ministry and the office of the prime minister.
“The old management team lacked – despite many years – the initiative to increase production despite favourable prices of copper/cobalt, and (failed due to) bad management of partnerships,” Mines Minister Martin Kabwelulu told Reuters by text message.
Kabwelulu said Ahmed Kalej, previously treasury director at the central bank, has replaced Callixte Mukasa as director of Gecamines, which mainly mines copper and cobalt in Katanga.
Albert Yuma, head of the country’s business federation FEC, will become president of the board, while Jacques Kamenga will deputise for Kalej, officials at the mines ministry said.
Six other administrators have also been changed.
Copper production in Congo is believed to be rising but official estimates of output vary widely.
Mines ministry forecasts from earlier this year saw production in 2011 from the Katanga region at 516,000 tonnes, mainly due to joint ventures with international firms, but Katanga governor Moise Katumbi told Reuters last week the figure would top one million tonnes next year.
But despite joint ventures in 30 projects with private international companies at the end of 2009 in some of the world’s most lucrative mining operations throughout Katanga, Gecamines has been saddled with debt, low revenues and a fall in its own output under the old management team.
“The priority has to be to kick-start production – that’s the main thing,” Kalej told Reuters by telephone on Monday.
“We also need to continue exploration and really invest in production facilities – it’s certainly down to finding finance, but also in the quality of spending,” Kalej added.
DECLINING FORTUNES
At its peak in the late 1980s, Gecamines produced more than 470,000 tonnes of copper and more than 13,000 tonnes of cobalt. But the decline in the company’s fortunes mirrored those of the country, which saw rampant corruption under the late president Mobutu Sese Seko, followed by two wars in the 1990s.
A peace deal in 2003, elections in 2006 and high metals prices have seen mining firms return to Katanga but Gecamines’ share of business remains low following a world collapse of prices after the 2008-2009 financial and economic crisis.
Leaving aside production from joint ventures copper and cobalt output were 13,367 and 495 tonnes, respectively, in 2009, according to the firm’s 2009 annual report, which cited delays in revamping equipment.
Outgoing Gecamines director Mukasa told Reuters last week that Gecamines has accumulated $1.5bn in debt following years of mismanagement under Mobutu.
Of that, he said the company owed more than $300m in unpaid salaries and worker dues, $300m for national power company SNEL and more than $300m on unpaid taxes.
Gecamines succeeded in increasing its share in projects during a protracted mining contract review process, including a 2.5% share increase in the $2bn Tenke Fungurume project with Freeport-McMoRan Copper & Gold.
Mukasa said Gecamines’s revenues for 2010 were likely to run to only $250m but that the budget had not been finalised.
