Congo prepares to sell off mining assets
By Rebecca Bream in London
Published: September 8 2008 03:00 | Last updated: September 8 2008 03:00
The government of Democratic Republic of Congo is planning to privatise some of its most valuable mining assets, as well as take a larger share of any future discoveries made in the -mineral-rich country.
Victor Kasongo, Congo's deputy minister of mines, said on Friday that "a major future initiative" for the -government was the transformation of state-owned mining companies into commercial entities. He said new management would be drafted in to turn round ailing businesses and then they could be floated through an initial public offering or stakes could be sold to private mining groups.
The first mining flotation should happen "in less than 12 months", said Mr Kasongo. "Gecamines [the state copper company] is a very interesting asset. And Okimo [the state gold company] has a lot of good reserves, it could be a good company for an IPO."
The news comes as the government continues its review of the country's mining contracts, many of which were signed when Congo was embroiled in a bloody civil war.
Mr Kasongo said that of the 61 mining companies involved in the review, the government was satisfied that 14 were developing their projects in a way that was fair and transparent. But 25 companies would have their contracts modified and a further 22 companies "have contracts so far out of line with mainstream international practice as to warrant cancellation". These groups would have to renegotiate their contacts completely.
Companies including Freeport McMoRan, Lundin Mining, Anvil Mining, Katanga Mining and First Quantum Minerals are involved in the long-running talks with the government. The uncertainty over their contracts has depressed their share prices, while several other large mining companies are waiting until the review is completed before investing in the country.
Mr Kasongo declined to say which companies had not satisfied government requirements and risked having their mining licences revoked. "We want to leave the negotiations some room."
The government also revealed that it would take control of any future mineral discoveries made in the country by private companies. It said state-owned companies such as Gecamines and Okimo would automatically own 51 per cent of any mining project, which it claimed was "based on the standard international practice of countries such as South Africa and Zambia".
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