Congo broke transparency rules with mine sale to Glencore unit: IMF

(Reuters) – Congo’s government breached its own regulations and the terms of an agreement with the World Bank by failing to disclose the sale of state shares in a joint mining venture, the International Monetary Fund (IMF) said on Friday.

The logo of commodities trader Glencore is pictured in front of the company's headquarters in the Swiss town of Baar November 20, 2012.  REUTERS/Arnd Wiegmann
The logo of commodities trader Glencore is pictured in front of the company’s headquarters in the Swiss town of Baar November 20, 2012. REUTERS/Arnd Wiegmann

Swiss trading house Glencore said this week its Congo joint venture with Israeli billionaire Dan Gertler’s Fleurette Group, Mutanda Mining, had bought a new concession in February to expand its copper and cobalt mining in the area.

The Kawama concession was purchased from local mining operator Dino Steel International, which held a 70 percent stake, and Congolese state miner Gecamines, which held the rest.

Congo’s prime minister passed a decree in 2011 requiring the public announcement of mining deals involving the state as part of efforts to improve transparency in Africa’s top copper producer.

However, a year later the IMF halted $240 million in loans after the government failed to provide sufficient details on the sale of mining assets by Gecamines to a British Virgin Islands-based company. The IMF does not currently have a lending programme in place.

Officials from Gecamines and the mines ministry were not immediately available for comment on Friday. A Congo mines ministry official said on Wednesday it only learned of the deal last week and had requested more details from Gecamines.

Dino Steel and Glencore declined to comment. Fleurette could not immediately be reached for comment.

“This sale of asset by the state-owned enterprise, Gecamines, as confirmed by the company acquiring the asset, was not posted within 60 days of its signing on the website of the Ministry of Mines nor gazette,” the IMF’s resident representative in Congo, Oscar Melhado, wrote in an email to Reuters, referring to the government’s obligation to publish details of the sale.

“It does not also comply with some criteria of the governance matrix agreed between the government with the World Bank related to posting contracts and competitive bidding for divestment of government assets,” he added, providing no specifics.

The governance matrix requires “open, transparent and competitive procedures” for the sale of mining stakes and that sales be published by the government within 60 days.

A World Bank representative was not immediately available for comment.

A source close to the deal said Dino Steel received $20 million and Gecamines $10 million for the concession.

In a statement on Friday, U.S. democracy watchdog the Carter Center called on the Congolese government to publish the terms of the Mutanda deal.

It said the Kawama concession is potentially very valuable, having previously attracted thousands of artisanal miners seeking high-grade ore near the surface.


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