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DRC’s State mining company hiding revenues – Carter Center

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DRC’s State mining company hiding revenues – Carter Center

Former US President Jimmy Carter

6th November 2017

By: Martin Creamer
Creamer Media Editor

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JOHANNESBURG (miningweekly.com) – Certain revenues of Democratic Republic of Congo (DRC) State mining company Gécamines are not directed to the public treasury and are largely beyond the realm of public oversight, resulting in the DRC and its people being deprived of many of the benefits of its rich minerals endowment, the Carter Center says in the first part of a comprehensive report.

“Though the DRC is rich in natural resources, its people are among the poorest in world. Despite billions of dollars in private investment in the extractive sector, the proceeds have thus far generated limited public benefits,” the report adds.

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It presents recommendations to improve Gécamines’ transparency and accountability so that the company better contributes to the development of the DRC and the welfare of the Congolese people. 
 
“The DRC has the potential to overcome the legacy of mismanagement and corruption that has plagued its extractive industries,” former US President Jimmy Carter writes in the report’s foreword, in which he calls on political leaders to work with the private sector, civil society, the international community and others to ensure responsible stewardship of the DRC’s natural resources.
 
In coming weeks, the centre will release case studies that shine a light on the decisions and practices that have deprived the DRC and its people of many of the benefits of Gécamines’ deal-making.

The first instalment documents how Gécamines has been able to use its privileged position to generate $1.1-billion from copper and cobalt deals between 2011 and 2014, but nearly two-thirds of it – or $750-million – cannot be reliably tracked to its accounts.

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The report is based on 200 interviews and a review of 100 mining contracts, 1 000 corporate documents and data from the Extractive Industries Transparency Initiative covering 2007–2014
 
A key finding is that Gécamines’ control of the country’s best mining permits has allowed it to act as the primary gatekeeper to Congo’s most desirable mining assets over the past two decades and that the company still holds 100 exploitation permits beyond the limits set forth in the country’s mining code.
 
Although it has averaged $262-million a year in royalties, bonuses and other contractual fees from 2009 to 2014, these revenues have not been directed to the public treasury and are largely beyond the realm of public oversight.
 
While Gécamines has asserted that these revenues would contribute to its planned revival of mining production, in practice they appear to have been mainly used for other purposes, the centre reports.

Nearly two-thirds of the $1.1-billion the company was contractually entitled to between 2011 and 2014 cannot be reliably tracked to Gécamines’ accounts, which raises significant questions about the actual destination of Gécamines’ income.
 
Prior to both the 2006 and 2011 elections, deal-making by State mining companies accelerated, generating significant proceeds that have been difficult to trace. As the country faces a period in which critical elections are supposed to take place, conditions are ripe for additional unreported sales and revenue diversion. 

The study finds it troubling that Gécamines has refused to publish contracts for several mining deals that may have generated more than half a billion dollars in 2016/17.

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